USDCAD Analysis
| Performance after Tuesday | |||||
| Period | Pct | Chg | Momentum | ||
| Tuesday | -0.31% | -44.4 Pips |  |
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| Week to-date | -0.33% | -46.7 Pips |  |
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| February | -1.43% | -207.9 Pips | |
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Upcoming key events (London Time)
Wed 01:30 PM USD CPI Inflation Rate (12-mth) Wed 01:30 PM USD CPI Inflation Rate excluding Food and Energy sectors (12-mth) Wed 03:00 PM USD Federal Reserve Chair Jerome Powell testifies Thu 01:30 PM USD PPI excluding Food and Energy sectors (12-mth)
What happened lately
The recent drop of -0.31% in USDCAD, closing at 1.42851 on Tuesday, comes in the context of no significant economic news at present. However, market participants are likely positioning themselves in anticipation of upcoming high-impact economic events in the United States. Expectations around these events could be influencing trading activity, causing fluctuations in the currency pair.
In the United States, several key economic indicators and events are slated for this week, which could have varying impacts on USD performance. On Wednesday, there will be an update on the USD Consumer Price Index (CPI) Inflation Rate, which is a critical measure for assessing inflationary pressures in the economy. Alongside this, the CPI Inflation Rate excluding the volatile Food and Energy sectors will also be released, providing a clearer picture of the underlying inflation trend. These figures could influence the Federal Reserve’s monetary policy decisions, as inflation is a crucial factor guiding interest rate adjustments. Moreover, Fed Chair Jerome Powell’s testimony is expected to shed light on the central bank’s outlook, and any hints regarding future policy moves could lead to market reactions. On Thursday, the Producer Price Index (PPI) excluding Food and Energy will be announced, further indicating producer-side inflation pressures.
The outcomes of these economic indicators and events will significantly impact the market’s perception of the US economy’s health and the future trajectory of the US dollar. If inflation readings are higher than expected, there could be increased speculation of further monetary tightening by the Federal Reserve, potentially strengthening the USD. Conversely, if the readings are weaker, it could lead to speculation about the Fed pausing or easing its rate hikes, which might weaken the USD.
As for the USDCAD currency pair, the anticipated high-impact events in the US could drive volatility in its exchange rate. A stronger USD from positive economic data or hawkish remarks by Chair Powell could decrease USDCAD, pushing the pair higher. Conversely, if the data signals lower inflation or dovish sentiment from the Fed, it could reduce demand for USD, causing USDCAD to decline further. Currency traders will closely monitor these upcoming events to adapt their strategies accordingly, with the potential for significant moves in the USDCAD pair occurring in response to economic data releases and Fed communications.
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What can we expect from USDCAD today?
USDCAD on Tuesday dropped -0.31% to 1.42851. Price is below 9-Day EMA while Stochastic is rising.
Updated daily direction for USDCAD looks bearish as the pair posted lower in Tuesday trading session.
Looking ahead for the day, immediate support level is at S1 1.42582 with break below could see further selling pressure towards S2 at 1.42312. To the upside, with the current momentum bearish, we prefer to look at breakout of the recent daily high of 1.43457 as a potential indicator of buying interest. Failure to break the resistance level would continue to echo bearish sentiment. A close below 1.42750 would indicate selling pressure.
For the week to-date, take note that USDCAD is mixed as compared to the prior week.
Key levels to watch out:
| R3 | 1.43996 |
| R2 | 1.43726 |
| R1 | 1.43289 |
| Daily Pivot | 1.43019 |
| S1 | 1.42582 |
| S2 | 1.42312 |
| S3 | 1.41875 |
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