Usdcad Consolidates With No Direction

last updated on

Usdcad Consolidates With No Direction

Usd/Cad Consolidates Near 1.3650, Awaits Key Economic Releases

The USD/CAD pair appears to be trading in a tight range & is seen near the 1.3650 handle. The bigger picture is that the USD/CAD is lacking any direction as the USD is showing consolidation while the CAD is also showing weakness.

The DXY, which provides key insights on what's next for the USD/CAD, is also hovering near the 105.70 level. The trend in the DXY is favoring the bears after the release of the Q1 GDP and the US core PCE. Together, these two releases have cast some serious doubts about the outlook of the US economy.

Boc To Cut Rates In June 2024

Meanwhile, the BoC is expected to move ahead with rate cuts starting from the June 2024 meeting. However, that might not be possible for the Fed after the release of the recent inflation indicator.

In Canada, the conditions for rate cuts are all present, such as weak retail sales, easing inflation, and a weak labor market. So, when it comes to rate cuts from the BoC in June, the chances are very high. But if we look at the Fed, the earliest forecasted rate cut can happen in July, a month after the BoC.

So if we only take this situation into consideration, it appears that the USD/CAD will likely turn lower in the next few months.

The technical analysis of the USD/CAD shows that it is trading close to the breakout level in an ascending triangle pattern. The investors are now closely watching for the breakout to make any fresh longs in the USD/CAD pair.

In the case of selling in the USD/CAD, the 50 EMA will provide much-needed support near the 1.3620 level. Similarly, the RSI is hovering in the 40 to 60 region which is a sign that bulls are still in control. But if the RSI drops under 40, it will be a sign that investors are now looking at the decisions of the BoC and the Fed.

Trending Stories