The USD/CAD pair is currently trading above 1.3700 as uncertainty looms over the Federal Reserve’s rate-cut path. The Fed has signaled one rate cut this year, but the financial markets are expecting two, as recent data shows a decline in discretionary spending by US consumers. This has led to speculation that inflation is decreasing towards the Fed’s 2% target.
Investors are closely watching the upcoming Canadian Retail Sales data for April, which is expected to show a positive trajectory after three consecutive months of contraction. The data is estimated to have increased by 0.7%, providing insight into the health of the Canadian economy.
Despite the consolidation in the 1.3600-1.3800 range, the USD/CAD pair holds above the crucial 1.3700 support and the 200-day Exponential Moving Average, indicating a bullish trend. The Relative Strength Index (RSI) remains neutral, signaling indecisiveness among market participants.
A breakout above the April 17 high at 1.3838 could lead to further upside towards the November 2013 high at 1.3900 and the psychological resistance level of 1.4000. On the other hand, a breakdown below the June 7 low at 1.3663 may expose the pair to lower support levels at 1.3600 and 1.3547.
In conclusion, the USD/CAD pair continues to trade within a tight range as investors await key economic data releases. Uncertainty surrounding Fed rate cuts and consumer spending trends are likely to influence the pair’s movements in the near term. Keep an eye on the upcoming Canadian Retail Sales data for further insight into the market direction.
