Usdcad drops as traders await Canadian inflation data release

USDCAD Analysis

Performance after Monday
Period	Pct	Chg	Momentum
Monday	-0.2%	-28 Pips
Week to-date	-0.09%	-13 Pips
May	1.16%	160 Pips

Upcoming key events (London Time)

Tue 01:30 PM CAD Bank of Canada Core Inflation CPI (12-mth)
Tue 01:30 PM CAD CPI Inflation Rate (12-mth)

What happened lately

In Canada, the upcoming high-impact economic events include the release of the Bank of Canada’s Core Inflation CPI and the overall CPI Inflation Rate, both scheduled for Tuesday at 01:30 PM. These metrics are crucial in assessing the inflationary pressures within the Canadian economy. The Core Inflation CPI, which excludes volatile items such as energy and food, is often used to gauge underlying inflation trends. A higher-than-expected inflation rate could indicate increased price pressures, influencing the Bank of Canada’s monetary policy decisions. If inflation rises significantly, it may prompt the central bank to consider tightening monetary policy by raising interest rates to curb inflation, potentially strengthening the Canadian dollar.

Regarding the USDCAD currency pair, the recent drop of -0.2% to 1.39370 on Monday and its current consolidation may be influenced by the anticipation of the upcoming Canadian economic data releases. If the Canadian inflation figures surpass expectations, it could lead to a stronger Canadian dollar, exerting downward pressure on the USDCAD pair. Conversely, if the inflation data comes in lower than expected, it may lead to a weaker Canadian dollar, potentially causing the USDCAD pair to rise. Traders will be closely monitoring these inflation indicators, as they will provide insights into potential shifts in monetary policy and economic health, subsequently affecting the exchange rate dynamics between the US dollar and the Canadian dollar.

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What can we expect from USDCAD today?

USDCAD on Monday dropped -0.2% to 1.39370. Price is above 9-Day EMA while Stochastic is falling.

Updated daily direction for USDCAD looks mixed as the pair is likely to consolidate above 1.39091 (S1).

Looking ahead today, to see upside interest, we prefer to look at price breakout of last daily high of 1.39728 or trades above daily pivot 1.39409. Break above could target R1 at 1.39689. While to the downside, we are looking at 1.39091 (S1) and daily low of 1.39130 as support levels. USDCAD need to break on either side to indicate a short-term bias. A close below 1.39130 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:

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