USD/CAD Price Analysis: Consolidates around 1.3650 ahead of Fed’s preferred inflation gauge

Source Fxstreet
  • USD/CAD trades sideways ahead of the US core PCE Inflation that will influence Fed rate cut expectations.
  • The US Dollar remains on backfoot as weak US Q1 GDP raise concerns over the economic outlook.
  • Investors see the BoC pivoting to interest rate cuts from June.

The USD/CAD pair is stuck in a tight range near 1.3650 in Friday’s European session. The Loonie asset struggles for a direction as the US Dollar consolidates ahead of the United States core Personal Consumption Expenditure Price Index (PCE) data for March, which will be published at 12:30 GMT.

On a monthly basis, the underlying inflation data is estimated to have increased steadily by 0.3%. Annually, the inflation measure is seen decelerating to 2.6% from the prior reading of 2.8%. The core PCE Price Index is the Federal Reserve’s (Fed) preferred inflation gauge, which is expected to influence speculation about when the central bank pivots to interest rate cuts, which financial markets are currently anticipating from the September meeting.

The US Dollar Index (DXY) is slightly up at 105.70 in the London session but fell sharply on Thursday after the US Q1 Gross Domestic Product (GDP) report showed that the economy expanded at a slower rate of 1.6% from the consensus of 2.5% and the prior reading of 3.4%. This has triggered doubts over the US economic outlook.

Meanwhile, the Canadian Dollar has remained underpinned against the US Dollar this week despite firm expectations that the Bank of Canada (BoC) will start reducing interest rates from the June meeting. Easing inflation, weak Retail Sales and loosening labor market conditions have boosted BoC rate cut bets for June.

USD/CAD corrects to near the breakout region of the Ascending Triangle chart pattern formed on a daily timeframe. The retest of the breakout region is keenly tracked by investors to build fresh longs as it is considered a discounted price. The 50-day Exponential Moving Average (EMA) near 1.3620 will provide support to the US Dollar bulls.

The 14-period Relative Strength Index (RSI) falls into the 40.00-60.00. The RSI is expected to rebound from 40.00 as the upside bias remains intact. However, a breakdown below the same will increase the odds of a bearish reversal.

Fresh buying opportunity would emerge if the asset falls further to near April 8 high at 1.3617. This would drive the asset towards April 11 low at 1.3661, followed by the round-level resistance of 1.3700.

In an alternate scenario, a breakdown below April 9 low around 1.3547 will expose the asset to the psychological support of 1.3500 and March 21 low around 1.3456.

USD/CAD daily chart

USD/CAD

Overview
Today last price 1.3658
Today Daily Change 0.0001
Today Daily Change % 0.01
Today daily open 1.3657
 
Trends
Daily SMA20 1.3663
Daily SMA50 1.3583
Daily SMA100 1.3499
Daily SMA200 1.3539
 
Levels
Previous Daily High 1.3731
Previous Daily Low 1.365
Previous Weekly High 1.3846
Previous Weekly Low 1.3724
Previous Monthly High 1.3614
Previous Monthly Low 1.342
Daily Fibonacci 38.2% 1.3681
Daily Fibonacci 61.8% 1.37
Daily Pivot Point S1 1.3628
Daily Pivot Point S2 1.3599
Daily Pivot Point S3 1.3547
Daily Pivot Point R1 1.3709
Daily Pivot Point R2 1.3761
Daily Pivot Point R3 1.379

 

 

Disclaimer: For information purposes only. Past performance is not indicative of future results.
placeholder
Gold ends three-week slide at the $4,400 line — eight straight days of ETF inflows vs a 5% 10-year and a 100 dollarSpot gold closed Friday at $4,378.39, up 0.84% on the day and about 0.8% for the week — its first weekly gain in four weeks — with the intraday high of $4,399.67 leaving it 33 cents shy of the $4,400 line. Gold ETFs have now logged eight straight sessions of inflows, but with the 10-year back above 5% and the dollar index near 100, here is what decides whether this is a reversal or a bounce.
Author  Suzie
Sep 20, Sun
Spot gold closed Friday at $4,378.39, up 0.84% on the day and about 0.8% for the week — its first weekly gain in four weeks — with the intraday high of $4,399.67 leaving it 33 cents shy of the $4,400 line. Gold ETFs have now logged eight straight sessions of inflows, but with the 10-year back above 5% and the dollar index near 100, here is what decides whether this is a reversal or a bounce.
placeholder
October hike odds climb toward 60% as Goldman and BofA both flip — what Warsh's "dose of accommodation" really changedRate futures now price roughly 55% to 62% for a 25bp hike at the October 27-28 FOMC, up from about 30% before Chair Warsh's post-meeting framing that the Fed is merely "removing some accommodation." Goldman Sachs has added an October hike to its forecast and Bank of America now sees moves in both October and December. Here is the repricing, the language behind it, and the two data points that decide it.
Author  Irene Q.
Yesterday 06: 22
Rate futures now price roughly 55% to 62% for a 25bp hike at the October 27-28 FOMC, up from about 30% before Chair Warsh's post-meeting framing that the Fed is merely "removing some accommodation." Goldman Sachs has added an October hike to its forecast and Bank of America now sees moves in both October and December. Here is the repricing, the language behind it, and the two data points that decide it.
placeholder
Memory chips surge, Nasdaq notches a second straight record close — why the Dow fell 185 points anywayMicron gained 5%, SanDisk 6.8%, Seagate 4% and Western Digital 3% as the memory complex led the Nasdaq Composite to a second consecutive record close of 27,244.28. But the Dow fell 185 points as JPMorgan, Wells Fargo and Schwab slid more than 3% each — a split tape that says more about positioning than about the economy.
Author  Irene Q.
Yesterday 06: 51
Micron gained 5%, SanDisk 6.8%, Seagate 4% and Western Digital 3% as the memory complex led the Nasdaq Composite to a second consecutive record close of 27,244.28. But the Dow fell 185 points as JPMorgan, Wells Fargo and Schwab slid more than 3% each — a split tape that says more about positioning than about the economy.
placeholder
Gold Price Forecast: XAU/USD drifts toward $4.300 with bears gaining tractionGold (XAU/USD) retraces Tuesday’s gains on Wednesday and drifts lower, approaching the $4,300 area as the US Dollar Index (DXY) rallies further amid high US Treasury yields.
Author  FXStreet
Yesterday 10: 02
Gold (XAU/USD) retraces Tuesday’s gains on Wednesday and drifts lower, approaching the $4,300 area as the US Dollar Index (DXY) rallies further amid high US Treasury yields.
placeholder
US input costs rose at the fastest pace in four years — the September flash PMI beat is an inflation story, not a growth storyUS September flash PMIs came in far above expectations, with the composite at 58.4, a five-year high. But the detail that moved markets was input cost inflation at its fastest since October 2022, driven by fuel, transport and supply shortages. Brent is back above $100 and the 10-year Treasury yield has hit its highest since 2007.
Author  Suzie
7 hours ago
US September flash PMIs came in far above expectations, with the composite at 58.4, a five-year high. But the detail that moved markets was input cost inflation at its fastest since October 2022, driven by fuel, transport and supply shortages. Brent is back above $100 and the 10-year Treasury yield has hit its highest since 2007.
Related Instrument
goTop
quote