- The Canadian dollar traded near a nine-month high against the US dollar.
- Oil rose due to potential supply disruptions intensified by political instability in Russia.
- The annual growth rate of Canada’s consumer price index will likely decline to 3.4% in May.
Today’s USD/CAD price analysis is bearish. The Canadian dollar traded near a nine-month high against the US dollar. Investors heeded bullish technical signals and awaited inflation data that could solidify another rate hike by the Bank of Canada.
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Christian Lawrence, the senior cross-asset strategist at Rabobank, stated that the Canadian dollar experienced a significant shift when it broke below the key technical support level at 1.3260.
Furthermore, this appreciation of the Canadian currency coincided with a 0.3% increase in oil prices, one of Canada’s major exports. On the other hand, the rise in oil prices occurred due to potential supply disruptions intensified by political instability in Russia.
Elsewhere, the annual growth rate of Canada’s consumer price index will likely decline to 3.4% in May. This follows an unexpected rise to 4.4% in April. This data will come out on Tuesday. At the moment, money markets assign approximately a 65% probability of the Bank of Canada raising its benchmark interest rate at the policy decision on July 12.
Earlier this month, the central bank implemented its first tightening since January, increasing the policy rate by 25 basis points to 4.75%.
In the US, upcoming data includes durable goods orders, housing figures, and consumer surveys from The Conference Board and the University of Michigan. Moreover, market participants anticipate a 25 basis points increase in the Federal Reserve’s funds target rate in July. However, the trajectory beyond that point remains uncertain.
USD/CAD key events today
The US will release housing data, core durable goods orders, and consumer confidence reports that will give more indications on the economy.
USD/CAD technical price analysis: Price to retest 1.3100.
USD/CAD is pushing lower after retesting the 30-SMA and the 1.3200 resistance level. The pair has been in a downtrend for some time, and it has always respected the 30-SMA as resistance. At the same time, the RSI has respected the 50-level as resistance, trading below it and supporting bearish momentum.
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Moreover, the price has made lower highs and lows, characteristic of a strong bearish trend. Therefore, bears will likely soon retest the 1.3100 support as they seek new lows.
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Saqib Iqbal
