USD/CAD PRICE, CHARTS AND ANALYSIS:

MOST READ: EUR/USD Value Forecast: EUR/USD Eyeing Bounce at Key Confluence Space

The Loonie has held agency in opposition to the rampant dollar this week as power within the Greenback Index (DXY) was negated by Canadian inflation knowledge and charge hike issues. The 1.3500 stage is now again into focus as markets have approached the European open with a wee little bit of warning following yesterday’s risk-on tone.

DEBT CEILING, THE US DOLLAR AND CANADIAN INFLATION DATA

Yesterday we noticed additional developments on the US debt ceiling enhance the general market sentiment. The Greenback Index (DXY) acquired assist from hawkish feedback by Federal Reserve policymakers which noticed the speed hike expectations for June rise briefly to across the 40% mark. The elevated optimism across the US debt ceiling might even see some greenback weak spot as evidenced by the foreign money power chart beneath and the value motion following the European open. The secure haven attraction of the US greenback might begin to wane as traders take a extra risk-on method.

Forex Power Chart: Strongest – NZD, Weakest – USD.

Supply: FinancialJuice

The DXY has been on a powerful run this week because it eyes its finest 2-week efficiency since September. Nonetheless, the power within the US greenback was largely negated in opposition to the loonie as Canadian inflation ticked increased in April, its first rise in 10 months. This added strain the Financial institution of Canada (BoC) with market members starting to reprice the percentages of a shock return to the mountaineering cycle by the Central Financial institution. This wouldn’t be an enormous shock as we’ve got already seen the Reserve Financial institution of Australia (RBA) pause charge hikes solely to return to the mountaineering cycle as soon as extra.

BANK OF CANADA

Financial institution of Canada (BoC) Governor Tiff Macklem has left the door open for a return to the mountaineering cycle ought to worth pressures and inflation threat stay elevated. Nonetheless, in feedback publish the inflation launch Governor Macklem stated he considered the April rise in inflation as an anomaly, predicting that costs will proceed their downward trajectory. Forward of the Governors feedback cash markets had charge hike odds at 80% for a July hike which quickly fell towards the 60% mark. Ina additional nod to Macklems place relating to charge hikes the Central Financial institution warned that the flexibility of households in paying off their money owed and stress within the housing market stay a priority. Are we seeing early indicators that the speed hike cycle is lastly taking maintain?

The Calendar doesn’t look all that unhealthy as we speak, however the one knowledge launch comes within the type of Canadian retail gross sales knowledge. On the US entrance we’ve got Federal Reserve policymakers Williams and Bowman earlier than we hear feedback from Fed Chair Jerome Powell.

For all market-moving financial releases and occasions, see the DailyFX Calendar

TECHNICAL OUTLOOK AND FINAL THOUGHTS

From a technical perspective, USD/CAD is displaying combined worth motion on the bigger timeframes. On the each day chart beneath, worth has been buying and selling in a 160-pip vary this week between the 1.3400 and 1.3660 handles. USDCAD has a behavior of buying and selling in tight ranges which precede a breakout (Proven by the orange circle on the chart), which may imply we’re setting for our subsequent main transfer on the pair. The pair can also be caught between the 200 and 100-day Mas, with the 50-day MA resting simply 50-pips above the present worth.

Personally, I do maintain a draw back bias because the resistance across the 1.3500 mark and above could be very robust, nonetheless we’ve got seen very combined and rangebound worth motion this week with a spread breakout doubtlessly offering the most effective alternative. Whether or not such a breakout happens as we speak stays to be seen. Strikes on the USD are more likely to be key as we speak as any information across the debt ceiling and feedback by Federal Reserve policymakers are digested earlier than the weekend.

Key Intraday Ranges to Maintain an Eye On

Assist Ranges:

• 1.3472 (200-day MA)
• 1.3440
• 1.3400

Resistance Ranges:

• 1.3500 (100-day MA)
• 1.3538 (50-day MA)
• 1.3600

USD/CAD Day by day Chart, Might 19, 2023

Supply: TradingView, Ready by Zain Vawda

— Written by Zain Vawda for DailyFX.com

Contact and comply with Zain on Twitter: @zvawda