. USD/CAD Falls to 1.3670: BoC Macklem Speech in Focus

USD/CAD Falls to 1.3670: BoC Macklem Speech in Focus

24 Jun 2024

USD/CAD extends its decline to 1.3670, with attention turning to BoC’s Macklem speech.

FUNDAMENTAL OVERVIEW:

  • USD/CAD falls further to 1.3670 ahead of BoC’s Macklem speech.
  • Canadian annual headline CPI is projected to have dropped to 2.6%.
  • Fed policymakers prefer to see sustained declines in inflation before considering rate cuts.

The USD/CAD pair continues its losing streak for the seventh consecutive session on Monday. The Loonie weakens as the US Dollar Index (DXY) dips to around 105.66 after failing to breach the critical 106.00 resistance level. The US Dollar declines as investors shift to riskier assets, anticipating the Federal Reserve (Fed) will implement two rate cuts this year.

Contrary to market expectations, Fed policymakers indicated in their latest interest rate projections that only one rate cut will occur this year. The Fed maintains this stance despite the May Consumer Price Index (CPI) report showing that price pressures eased more than anticipated.

Meanwhile, the Canadian Dollar strengthens despite expectations that the Bank of Canada (BoC) will implement future rate cuts. Investors await clarity on the interest rate outlook from BoC Governor Tiff Macklem, whose speech is scheduled for 17:00 GMT.

This week, investors will also be closely monitoring the Canadian CPI report for May, set to be released on Tuesday. Analysts anticipate that the annual headline CPI may have slowed down to 2.6% from 2.7% recorded in April.

USD/CAD TECHNICAL ANALYSIS DAILY CHART:

Technical Overview:

USD/CAD is trading within a down channel.

USD/CAD is moving below all the Moving Averages (SMA).

The Relative Strength Index (RSI) is in Neutral zone, while the Stochastic oscillator suggests Negative trend.

Immediate Resistance level: 1.3696

Immediate support level: 1.3671

HOW TO TRADE USD/CAD

After initially rising, USD/CAD encountered resistance and sharply declined. Since then, the pair has been consolidating within a range. Currently, it is hovering around a critical support area. A breakdown below this level could potentially lead USD/CAD to further downside movement towards the previous swing low.

TRADE SUGGESTION- Stop Sell– 1.3664, TAKE PROFIT AT- 1.3613, SL AT- 1.3707.