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  • The price of the pair increased to 1.2600 because of the dollar’s strength.
  • The National Bank of Canada was surprised by the good results in employment data despite the spread of the Delta variant of Covid-19.
  • The Producer Price Index in the US fueled speculations about Inflation.

A stronger USD takes the pair over 1.2600 by the end of the week while the US dollar index rises to 92.55. On the Canadian side, there was good news about employment data. The unemployment fell to 7.1% from the 7.5% of July. This way, the unemployment rate is closer to the pre-pandemic level. The USD/CAD weekly forecast remains bullish however, the focus will remain on the fundamental events from the Canadian economy.

Despite the threat of the Delta variant of Covid-19, August was a good month in Canada in terms of job creation. In the US, the most important development was the release of the Producer Price Index, which came at 8.3%, the highest rate since 2010.

This confirms that inflation will be still a problem for the US and generated speculations about possible measures taken by the FED. Such speculations were fuelled by comments like the one from Fed Governor Michelle Bowmans about beginning the tapering.

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Upcoming events

For the next week, inflation will be at the center of attention for the pair. On Tuesday will be published the inflation and core inflation rate in the US. For the inflation rate, experts are expecting a rate close to 5.3%. While for Core inflation Rate, they expect 4.2%. In Canada, the inflation data will be released on Wednesday, and it is forecast a 3.3% inflation rate for August YoY.

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USD/CAD Technical Analysis

USD/CAD weekly forecast - daily chart
USD/CAD weekly forecast – daily chart

On the daily chart, we can see an ascending channel in which the pair is trading. The cross of the 50-days and 200-days SMA is yet to confirm the bullish impulse. If the sellers take the wheel, the price could fall below the 200-days SMA to target the support line of 1.2425 and beyond this 1.2300. On the other hand, if the price goes north, the first support level to break will be 1.2700 to then go after the 1.2885 level.


USD/CAD Next week Forecast

The pair USD/CAD is lacking strong direction. However, some indicators point up. If this is where the price goes, the technical levels to watch are 1.2700, 1.2761, and 1.2885.

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