USD/CAD Price Analysis: Corrects From 1.3800 As Us Dollar’s Rally Stalls Ahead Of Fed’s Decision

The USD/CAD pair drops to 1.3740 in Wednesday’s European session after failing to recapture the round-level resistance of 1.3800 on Tuesday. The Loonie asset corrects as firm recovery of almost 1.40$ in the US Dollar Index (DXY) appears to be stalling due to uncertainty ahead of the United States (US) Consumer Price Index (CPI) data for May and the Federal Reserve’s (Fed) interest rate decision, which are scheduled in the North American session.

US annual core CPI, which excludes volatile food and energy prices, is estimated to have eased slightly to 3.5% from April’s release of 3.6%, with headline figures growing steadily by 3.4%. The inflation data turning out to be stubborn would weaken market expectations for the Fed to begin reducing interest rates from the September meeting, while soft number would boost them.

Meanwhile, investors will majorly focus on the Fed’s dot plot as the central bank is expected to remain status quo for the seventh straight time.

The Canadian Dollar remains broadly on the backfoot as investors expect that the Bank of Canada (BoC) could deliver subsequent rate cuts to boost labor demand. Canada’s inflation has already declined into BoC’s preferred core CPI range of 1%-3%.

USD/CAD strengthens after a breakout of the Descending Triangle chart pattern formed on a daily timeframe. Upward-sloping 20- and 50-day Exponential Moving Averages (EMAs) near 1.3700 and 1.3660, respectively, suggest that the overall trend is bullish.

The 14-period Relative Strength Index (RSI) hovers near 60.00. A sustainable move above the same will push momentum towards the upside.

Fresh buying opportunity would emerge if the asset breaks above April 17 high at 1.3838. This would drive the asset towards 1 November 2023 high at 1.3900, followed by the psychological resistance of 1.4000.

In an alternate scenario, a breakdown below June 7 low at 1.3663 will expose the asset to May 3 low around 1.3600 and April 9 low around 1.3547.

 

USD/CAD daily chart

(Click on image to enlarge)

 

USD/CAD

OVERVIEW
Today last price 1.3749
Today Daily Change -0.0009
Today Daily Change % -0.07
Today daily open 1.3758

 

TRENDS
Daily SMA20 1.3673
Daily SMA50 1.3681
Daily SMA100 1.3596
Daily SMA200 1.358

 

LEVELS
Previous Daily High 1.3792
Previous Daily Low 1.3748
Previous Weekly High 1.3768
Previous Weekly Low 1.3603
Previous Monthly High 1.3783
Previous Monthly Low 1.359
Daily Fibonacci 38.2% 1.3765
Daily Fibonacci 61.8% 1.3775
Daily Pivot Point S1 1.3741
Daily Pivot Point S2 1.3723
Daily Pivot Point S3 1.3697
Daily Pivot Point R1 1.3784
Daily Pivot Point R2 1.381
Daily Pivot Point R3 1.3828

More By This Author:

EUR/USD Finds Support As US Dollar Edges Down Ahead Of CPI, Fed Decision
AUD/USD Stabilizes Near 0.6600 Albeit Uncertainty Ahead Of US CPI And Fed’s Decision
USD/CAD Gathers Strength To Recapture 1.3800 Ahead Of Fed Policy

Disclaimer: Information on this article contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes ...

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