USD/CAD Steady at 1.3700, Awaits Canadian Retail Sales
USD/CAD remains steady around 1.3700, awaiting Canadian Retail Sales data and Fedspeak for direction
FUNDAMENTAL OVERVIEW:
- USD/CAD struggles to attract buyers, consolidating in a range at the end of the week.
- Bulls remain unmoved by continued USD strength and further declines in oil prices.
- Traders await Canadian Retail Sales data and speeches by FOMC members for new momentum.
The USD/CAD pair fluctuated between modest gains and minor losses during the Asian session on Friday, consolidating its recent recovery from sub-1.3600 levels, a three-month low touched last week. Currently trading around 1.3700, spot prices remain nearly unchanged for the day and are set to register weekly gains for the first time in six weeks.
The US Dollar (USD) continues to build on the previous day’s rebound from a three-month low, providing support for the USD/CAD pair. The Conference Board’s leading index fell for the fourth consecutive month in June, indicating a slowdown in US economic growth. Concerns over a slowdown in China, the world’s second-largest economy, also weigh on investor sentiment, benefiting the safe-haven Greenback.
Meanwhile, a stronger US Dollar reduces demand for USD-denominated commodities, including crude oil, which negatively impacts the commodity-linked Canadian Dollar (Loonie) and supports the USD/CAD pair. However, the absence of strong follow-through buying warrants caution for bullish traders, especially amid speculation that the Federal Reserve will begin cutting interest rates in September. Traders also remain hesitant and prefer to stay on the sidelines ahead of the Bank of Canada (BoC) meeting next Wednesday.
Ahead of this key central bank event, investors on Friday will focus on the release of Canadian Retail Sales data. This, along with oil price dynamics, should influence the Canadian Dollar (CAD). Additionally, Fedspeak and broader market risk sentiment will drive USD demand, providing meaningful impetus to the USD/CAD pair and creating short-term trading opportunities.
USD/CAD TECHNICAL ANALYSIS DAILY CHART:
Technical Overview:
USD/CAD is currently trading within the up channel.
USD/CAD is positioned above all the Moving Averages (SMA).
The Relative Strength Index (RSI) is in the Buying zone, while the Stochastic oscillator suggests a Negative trend.
Immediate Resistance level: 1.3742
Immediate support level: 1.3717
HOW TO TRADE USD/CAD
USD/CAD initially rallied but faced resistance, retracing to form a consolidation range. A recent breakout above a key resistance level suggests bullish momentum. However, a pullback to retest the broken support as resistance is possible before the uptrend resumes.
