- The USD/CAD forecast shows a weak Canadian dollar as BoC rate cut bets rise.
- Inflation in Canada eased to 1.7% in July from the previous reading of 1.9%.
- Oil has dropped amid progress in peace talks with Russia and Ukraine.
The USD/CAD forecast shows a weak Canadian dollar as BoC rate cut bets rise after soft inflation figures from Canada. At the same time, the loonie is declining due to a drop in oil prices amid peace talks between the US, Russia, and Ukraine.
–Are you interested to learn more about forex options trading? Check our detailed guide-
Data on Tuesday revealed that inflation in Canada eased to 1.7% in July from the previous reading of 1.9%. At the same time, the 3-month core inflation eased from 3.4% to 2.4%. The report led to an increase in Bank of Canada rate cut bets for October. At the same time, the likelihood of a September rate cut rose from 31% to 39%.
“I think the most impactful bit of the report is the deceleration in three-month rates of core CPI,” said Robert Both, senior Canada macro strategist at TD Securities. “So even with CPI-trim and median still running near 3% year-over-year, the bank has put a little more weight on those three-month core rates.”
The Canadian dollar also fell due to a decline in oil prices. Oil has dropped amid progress in peace talks with Russia and Ukraine. An end to the war could lead to the lifting of sanctions on Russian oil. Therefore, it could lead to a surge in supply.
USD/CAD key events today
USD/CAD technical forecast: Bulls face the 1.3875 key resistance level
USD/CAD 4-hour chart
On the technical side, the USD/CAD price has rallied to the 1.3875 key resistance level. At the same time, it trades well above the 30-SMA, with the RSI in the overbought region, suggesting a solid bullish bias.
–Are you interested to learn more about forex tools? Check our detailed guide-
Bulls have made a sharp rally from the 30-SMA support to the current level, showing solid momentum. However, after such a strong move, they are facing the 1.3875 key resistance level. This level has caused the price to reverse before, and it can do so again.
If USD/CAD pauses at the current resistance, the price might pull back to retest the 30-SMA. After this, it might either break below or bounce higher to retest the resistance. Meanwhile, a break above the resistance will strengthen the bullish bias as the price will make higher highs.
Looking to trade forex now? Invest at eToro!
67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.