Today’s USD/CAD outlook is slightly bullish as investors focus on today’s inflation data after last week’s shocking US jobs report. The chances of a 75-basis-point rate hike in September are again high.

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The CPI data, scheduled to be released at 12:30 GMT, may deviate from the previous pattern and show some easing pricing pressures this time.

Two consecutive quarters of decreased economic production are what constitutes a technical recession. Therefore, assuming the GDP numbers are accurate, the American economy is already in a downturn. However, other indices, such as those for consumption and employment, point to continued economic expansion.

Fed policymakers have highlighted strong employment growth while they downplay the GDP projections and warn the markets that much work needs to be done to control inflation.

There is a sliver of hope regarding inflation. With the recent decline in prices of primary commodities and the easing of supply limitations, the price components of the PMIs have significantly decreased from their high. As commodities like oil decline, the Canadian dollar weakens, giving strength to USD/CAD bulls.

USD/CAD Key Events Today

According to forecasts, the US consumer price index increased by 0.2% month over month in July, which would be the weakest rate over a year and resulted in a decrease in the annual rate from 9.1% to 8.7%. However, there can be some negative news regarding underlying inflation.

The predicted core CPI rate is 6.1% y/y, representing a slight acceleration from the rate of 5.9% in the previous month. However, the month-on-month rate is expected to moderate from 0.7% to 0.5%.

USD/CAD Technical Outlook: Bullish Above 1.2843

The 4-hour chart shows a shift in momentum from bearish to bullish. The RSI broke below 50 when bears were strong, but it is back above 50, showing bulls have become more assertive. The price has broken above the 30-SMA, signaling bulls have taken charge.

If the bullish momentum remains strong, the price will likely retest resistance at 1.29850 before possibly breaking above. However, if bulls fail to keep their control, the price might break below the 1.28438 support level.

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