USD/CAD Weekly Forecast: USD Is Looking Strong And Forcing The Pair Above 1.2600

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

A stronger US dollar looks to take the pair over 1.2600 by the end of the week while the US dollar index rises to 92.55. On the Canadian side of things, there was positive news about employment data. Unemployment fell to 7.1% from July's 7.5% reading. Thus, the unemployment rate is closer to the pre-pandemic level. The USD/CAD weekly forecast remains bullish, and focus will remain on fundamental events from the Canadian economy.

Despite the threat of the Delta variant, August was a good month for 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 it generated speculation about possible measures taken by the Fed. Such speculations were fueled by comments like the one from Michelle Bowman about beginning the tapering.

Upcoming Events

For the next week, inflation will be at the center of attention for the pair. On Tuesday, the inflation and core inflation rate for the US will be published. For the inflation rate, experts are expecting a number 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 to be around 3.3% for August year-over-year.

USD/CAD Weekly Forecast – Daily Chart

USD/CAD Technical Analysis

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

USD/CAD Forecast for Next Week

The USD/CAD pair 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.