• The USD/CAD price analysis shows increasing pressure on the Fed to lower interest rates.
• US data revealed softer-than-expected wholesale inflation and weaker consumer spending.
• Oil collapsed on Thursday after Trump announced a likely nuclear deal with Iran.

The USD/CAD price analysis shows increasing pressure on the Federal Reserve to lower interest rates. As a result, the dollar is fragile against most of its peers. However, gains for the Canadian dollar remained subdued due to the recent collapse in oil prices. 

Data from the previous session revealed softer-than-expected wholesale inflation and weaker consumer spending in the US. The PPI unexpectedly dropped by 0.5%. Meanwhile, economists had expected a 0.2% increase. Previously, data had also shown cooler consumer inflation. However, Powell has been expecting a spike due to Trump’s tariffs. Therefore, he might remain cautious for a bit longer.

A separate report revealed that retail sales increased by 0.1%. Although it was slightly higher than the forecast, it was a sharp drop from the previous 1.7% increase. Weaker consumer spending points to a slowdown in the economy that could further pressure the Fed. 

The economic figures weighed on the dollar, allowing the loonie to rise. However, a sharp decline in oil kept a lid on gains. Oil collapsed on Thursday after Trump announced a likely nuclear deal with Iran. Such an outcome would add supply to an already loose market.
 

USD/CAD key events today

• Prelim UoM Consumer Sentiment
• Prelim UoM Inflation Expectations
   

USD/CAD technical price analysis: Bulls struggle to break 1.4000 resistance

(Click on image to enlarge)

USD/CAD 4-hour chart

On the technical side, the USD/CAD price has pulled back to retest the 30-SMA support after failing to break above the 1.4000 key psychological level. However, the bullish bias remains intact since the price sits slightly above the SMA with the RSI above 50. 

USD/CAD has come from a long consolidation. Bulls took charge when the price broke above the range resistance level. At the same time, the price has maintained its position above the SMA, indicating the start of a bullish trend. Therefore, bulls might soon retest the 1.4000 key resistance level. A break above will allow the price to climb to the 1.4100 level. This would strengthen the bullish bias. 

However, if the 1.4000 resistance holds firm, the price might start consolidating between the 1.3900 support and the 1.4000 resistance.

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