USD/CAD Outlook: Tumbling to 1.33 Amid Easing US Inflation

• The US PPI decreased by the most in almost three years last month.

• Chinese exports soared 14.8% in March from the same month a year earlier.

• Oil lost some of its recent gains due to worries about an impending US recession.

Today’s USD/CAD outlook is bearish. On Friday, speculators raised their bets of an impending halt to the Fed’s rate-hike cycle on evidence of slowing inflation. This sent the US dollar to its lowest level in a year against a basket of currencies.

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A day after inflation statistics indicated a reduction in consumer prices, data from the US Labor Department showed the producer price index decreased by the most in almost three years last month.

The probability that the Fed will increase interest rates by 25 basis points next month is 69%. However, the markets are also pricing in a series of reductions from July through year-end, with rates at just around 4.3% in December.

Chinese exports soared 14.8% in March from the same month a year earlier, evidence that global inflationary pressure is easing. 

On Thursday, the Canadian dollar climbed to almost a two-month high versus the US dollar. Softer-than-expected US inflation data put pressure on traders who had increased their bearish bets on the currency to the highest level in four years.

The hawkish tone taken by the BOC after its recent meeting has also supported the loonie.

One of Canada’s main exports, oil, lost some of its recent gains due to worries about an impending US recession and OPEC’s concerns about a drop in summer oil demand.

USD/CAD key events today

Investors will focus on retail sales data from the US that is an indicator of consumer spending and the state of the economy.

USD/CAD technical outlook: Upside correction from oversold zone

In the 4-hour chart, USD/CAD is in freefall. The price has consistently broken below support levels without pause. This comes after the bears took control by breaking below the 30-SMA support. Since then, the price has fallen below the 1.3425 and the 1.3350 support levels.

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The next key level is 1.3301. However, we might get a pullback as the price is deep in the oversold region. This might allow bulls to come in and retrace the recent move before the downtrend continues.

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