USD/CAD Price Analysis: Bulls Return on Signs of High Inflation

• First-quarter US GDP likely grew by a slower 1.1%.

• US prices for core personal consumption expenditures increased by 4.9% in Q1.

• The Canadian dollar was stronger on Thursday as US equity markets rose. 

Today’s USD/CAD price analysis is bullish. The US dollar gained ground on Friday after figures showed persistently high inflation in the US. The figures supported expectations for a 25-basis-point rate increase at next week’s FOMC meeting.

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According to data released on Thursday, the first quarter’s US economic growth was slower than anticipated. Still, consumer spending increased faster, pointing to sticky inflation. First-quarter US GDP likely grew by a slower 1.1%.

Investor attention, however, was drawn to the GDP report’s quarterly inflation rate. In Q1, prices for core personal consumption expenditures increased by 4.9%.

A second report revealed that initial claims for state unemployment benefits fell by 16,000 for the week ending April 22. The report supported predictions for next week’s rate increase as it reflected a still-tight job market.

The Canadian dollar gained ground against the US dollar on Thursday as equity markets rose. However, the exchange rate remained close to its lowest point in over four weeks.

Wall Street increased due to stronger-than-expected corporate earnings. Oil, one of Canada’s major exports, settled 0.6% higher at $74.76 a barrel, supporting the CAD.

Erik Bregar from Silver Gold Bull stated that “the bounce in the equity market and some commodities certainly helped (the CAD).”

USD/CAD key events today

Investors will get a more recent picture of inflation in the US when the core PCE price index is released. This report will also shed light on the Fed’s next policy move. They will also pay attention to Canada’s GDP report.

USD/CAD technical price analysis: Buyers eyeing the 1.3700 psych level

USD/CAD has broken above the previous high at the 1.3650 level. This move comes after it found support at the 30-SMA and the 1.3601 support level. The price respected the SMA as a support level, and the RSI stayed above 50, pointing to a bullish move.

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The bulls are strong and will soon make a new high. The next resistance level is at the 1.3700 key psychological level. This level might stop the price before the uptrend continues. However, we might see bears return if the level holds firm.

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