USD/CAD Poised for Bullish Impulse Amid Key Economic Data Releas

25 juin

Ahead of the release of key economic data, including the CAD CPI m/m, Median CPI y/y, Trimmed CPI y/y, and the USD CB Consumer Confidence, the USD/CAD is making a notable bullish impulse around the 1.3680 level. This move aligns with the 50% and 61.8% Fibonacci retracement levels from the last swing, along with a confluence of resistance in this area, where the price is positioned below the 50 Moving Average on the H4 timeframe.

Key Economic Data Insights

Canadian CPI Expectations:
Statistics Canada is set to release the top-tier Consumer Price Index (CPI) data for May. The annual rate of CPI is expected to rise to 2.6% in May, slightly down from April’s 2.7% increase. On a monthly basis, CPI inflation is anticipated to ease to 0.3% from April’s 0.5% growth. The core CPI, which excludes volatile items like food and energy, showed no growth over the month in April.

The Bank of Canada (BoC) will also release its core Consumer Price Index data. The annual BoC core CPI inflation is expected to remain steady at 1.6%, while the monthly BoC core CPI is projected to increase by 0.2%.

Canada’s inflation rate is likely to stay below 3.0% for the fifth consecutive month, approaching the central bank’s 2.0% target. A soft CPI report could enhance the BoC’s confidence that inflation is sustainably reaching its target, influencing market expectations for a potential rate cut next month.

Market Implications and Technical Analysis

If the CPI data is softer than expected, it could bolster the BoC’s confidence in a steady decline towards its inflation target, potentially leading to another rate cut. This scenario could cause the CAD to weaken, allowing the USD/CAD pair to stage a rebound toward the 1.3800 level as renewed dovish bets weigh on the CAD.

Technical Outlook:

Fibonacci Levels: The price action around the 1.3680 level is supported by the 50% and 61.8% Fibonacci retracement levels from the last swing, indicating a potential support zone.

Moving Averages: The USD/CAD is trading below the 50 Moving Average on the H4 timeframe, which could act as a resistance level.

Support and Resistance: The area around 1.3680 is crucial, given the confluence of Fibonacci levels and resistance, which could dictate the next move for the pair.

Conclusion

Given the upcoming economic data releases and the current technical setup, we are looking for a correction on the continuation in the USD/CAD pair. The interplay between the anticipated CPI data and the Bank of Canada’s potential policy response will be pivotal in shaping the near-term direction of the USD/CAD.

25 juin

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