- Canada’s retail sales fell 0.3% in January from December.
- Data on Tuesday showed a drop in inflation in Canada.
- The US economy remains resilient, and inflation is high.
The USD/CAD outlook leans bullish, with the pair maintaining proximity to last week’s highs. Notably, the Canadian dollar stumbled amidst disappointing economic data, contrasting with the dollar’s resilience, fueled by upbeat reports.
-Are you interested in learning about the best AI trading forex brokers? Click here for details-
Data on Friday revealed a decline in Canada’s retail sales, indicating poorer consumer spending. Retail sales fell 0.3% in January from December. A slowdown in the economy will likely put pressure on the Bank of Canada to cut rates. Data on Tuesday showed a drop in inflation in Canada, pushing chances of a June cut above 70%.
Major central banks are slowly becoming more dovish as inflation eases and economies start to buckle under the pressure of high borrowing costs. Last week, the Swiss National Bank became the first major central bank to cut interest rates. Moreover, markets expect the European Central Bank and the Bank of England to start cutting rates in June.
On the other hand, the US economy remains resilient, and inflation is still a problem. Therefore, although markets expect the first cut in June, there is doubt. Data last week showed continued strength in the US economy. Policymakers might worry about cutting interest rates too soon as it could lead to renewed inflation. Consequently, the dollar ended the week with gains.
Still, USD/CAD retreated slightly on Monday as the Canadian dollar strengthened on rising oil prices. Oil rose amid supply worries fueled by geopolitical tensions.
USD/CAD key events today
There won’t be any major economic releases today from Canada or the US. As a result, volatility might be low.
USD/CAD technical outlook: Bulls pause at 1.3600 resistance
On the technical side, the USD/CAD price is pulling back after retesting the 1.3600 key resistance level. However, there is no clear direction in the price as it bounces between the 1.3475 support and the 1.3600 resistance levels. Moreover, the price has made several failed attempts to break out of this range area.
-Are you interested in learning about the forex indicators? Click here for details-
At the moment, bulls are in the lead. However, the price has paused at the range resistance, and bears have resurfaced. Therefore, there is a chance the price will fall back to the range’s support. However, bulls might break above 1.3600 if the 30-SMA holds as support.
Looking to trade forex now? Invest at eToro!
68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
Share
Saqib Iqbal
