USD/CAD retreats from 1.3400 as USD Index extends losses, US Inflation eyed

USD/CAD has sensed selling pressure after a recovery move to near 1.3400 as oil prices eye more upside.
US President Joe Biden is interested in a separate discussion for the budget.
If US inflation remains persistent, the Fed would start preparing for hiking interest rates further.

Sagar Dua FXStreet

The USD/CAD pair has sensed selling pressures after a rebound to near the round-level resistance of 1.3400 in the Asian session. The Loonie asset has faced selling interest as the US Dollar Index (DXY) has extended its correction further to 101.55 after US debt ceiling negotiations failed a decisive outcome.

S&P500 futures have added decent gains in Asia amid a decline in the USD Index’s appeal as a safe-haven. However, the overall market mood is risk averse as a delay in the US debt ceiling outcome could impact the long-term outlook of the US economy. This would have a significant impact on US equities.

US President Joe Biden is interested in a separate discussion of the budget but is not interested in spending cuts for the approval of a debt-ceiling increase. The street is anticipating a bipartisan agreement between the White House and Republicans as US default on obligated payments is not an option.

As delegates will meet again for US debt ceiling negotiations on Friday, investors are shifting their focus toward the release of the US Consumer Price Index (CPI) data. Monthly headline inflation is seen accelerating by 0.4% vs. the former pace of 0.1%. Annual headline inflation is expected to remain steady at 5.0% while core CPI that excludes oil and food prices is seen softening to 5.5% from the prior release of 5.6%.

If US inflation remains persistent, the Federal Reserve (Fed) would start preparing for hiking interest rates further as its major agenda is to achieve price stability.

On the oil front, oil prices are gathering strength for a fresh rally above the immediate resistance of $73.50 as investors have digested fresh interest rate hikes from the Fed and the European Central Bank (ECB). Going forward, investors will keep an eye on the oil inventories to be reported by US Energy Information Administration (EIA) for the week ending May 05.

It is worth noting that Canada is the leading exporter of oil to the United States and higher oil prices will support the Canadian Dollar.

USD/CAD

Overview
Today last price	1.3376
Today Daily Change	-0.0008
Today Daily Change %	-0.06
Today daily open	1.3384

Trends
Daily SMA20	1.3491
Daily SMA50	1.3576
Daily SMA100	1.3518
Daily SMA200	1.3452

Levels
Previous Daily High	1.3406
Previous Daily Low	1.3365
Previous Weekly High	1.3639
Previous Weekly Low	1.3371
Previous Monthly High	1.3668
Previous Monthly Low	1.3301
Daily Fibonacci 38.2%	1.3391
Daily Fibonacci 61.8%	1.3381
Daily Pivot Point S1	1.3364
Daily Pivot Point S2	1.3344
Daily Pivot Point S3	1.3323
Daily Pivot Point R1	1.3405
Daily Pivot Point R2	1.3426
Daily Pivot Point R3	1.3446

Author

Sagar Dua

FXStreet

Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.

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