- Powell famous that inflation was on a downtrend.
- US shopper inflation information confirmed a bigger-than-expected easing in worth pressures.
- US wholesale inflation figures got here in greater than anticipated.
The USD/CAD weekly forecast is bearish as easing US inflation has raised the chance of a September Fed minimize.
Ups and downs of USD/CAD
The USD/CAD pair had a barely bearish week however closed nicely above its lows. Through the week, traders centered on Powell’s testimony and US inflation information. Though Powell was cautious, he famous that inflation was on a downtrend.
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After his speech, shopper inflation information confirmed a bigger-than-expected easing in worth pressures. This led to a surge in Fed charge minimize expectations which weighed closely on the greenback. Nonetheless because the week ended, US wholesale inflation figures got here in higher-than-expected, permitting the greenback to get better barely.
Subsequent week’s key occasions for USD/CAD
Subsequent week, the US will solely launch a retail gross sales report. In the meantime, Canada will launch inflation and retail gross sales figures. The US retail gross sales report will add to the latest studies which have formed the Fed’s charge minimize outlook. This week, the chance of a September minimize rose to 93% after the patron inflation report. Consequently, if retail gross sales ease, there will likely be extra certainty a few charge minimize in September.
In the meantime, Canada’s inflation report will affect BoC charge minimize bets. Final month, inflation in Canada unexpectedly accelerated, resulting in a drop in bets for a minimize in July. If inflation spikes once more, Canada’s central financial institution may not minimize in July. Nonetheless, if it eases, probabilities of a minimize will go up.
USD/CAD weekly technical forecast: Bears face the 1.3601 help
On the technical facet, the USD/CAD worth is difficult the 1.3601 key help stage. The bias is bearish as a result of the value trades beneath the 22-SMA with the RSI beneath 50 in bearish territory. Nonetheless, after the earlier bullish transfer, the value has been caught in a sideways transfer between the 1.3601 help and the 1.3800 resistance.
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This consolidation might be a pause within the earlier bullish development or the beginning of a reversal. The value should break beneath the 0.382 Fib retracement stage and the 1.3601 help to substantiate a reversal. Alternatively, if that is only a pause, the 1.3601 help may maintain agency, permitting bulls to retest and presumably break above 1.3800.
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