- A pause in the US greenback sell-off affords some respite to USD/CAD.
- Oil worth weak point helps alleviate the downside strain.
- 50 DMA challenges bullish commitments, Canadian inflation eyed.
USD/CAD is licking its wounds whereas defending 1.2850, sitting at the lowest stage in two weeks, as the US greenback bears take a breather after the current downward spiral.
The sentiment stays upbeat amid easing recession fears, in the face of Russia’s Nord Stream 1 re-opening at lowered ranges and ebbing 100 bps July Fed fee hike bets. Meanwhile, Netflix Inc. reported a smaller-than-expected subscriber loss, which additionally improve the market temper.
Meanwhile, the renewed pullback in WTI costs after the earlier upsurge additionally helps cushion the downside in the USD/CAD pair. The black gold slipped in Asian buying and selling after the API crude stockpiles jumped by 1.86 million barrels vs. +1.40 million barrels anticipated.
Looking ahead, the US greenback worth motion and the Canadian inflation knowledge will emerge as the key drivers for the main. The Canadian Consumer Price Index (CPI) is seen larger at 8.4% YoY in June vs. 7.7% anticipated. The annualized core CPI is more likely to surge 6.7% in June vs. 6.1% reported beforehand. Note that the Bank of Canada (BOC) hiked the key charges by a shock 100 bps to 2.5% at its coverage assembly final week to battle raging inflation.
From a short-term technical perspective, USD/CAD is difficult the crucial horizontal 50-Daily Moving Average (DMA) at 1.28558, as of writing.
Daily closing beneath the latter is required to renew the bearish momentum from above 1.3200 ranges. The 14-day Relative Strength Index (RSI) is flatlined however stays beneath the 50.00 stage, suggesting that the downside bias appears to be like nicely in place in the close to time period.
A breach of the key assist might set off a pointy drop in direction of the mildly bullish 100 DMA at 1.2771. Ahead of that, the 1.2800 spherical quantity could possibly be put to check.
USD/CAD: Daily chart
On the different facet, bulls must recapture the 1.2900 barrier to provoke any significant restoration. Up subsequent, the falling 21 DMA at 1.2950 will provide stiff resistance.
A sustained break above the latter is crucial to unleashing the further restoration in direction of the 1.3000 mark and past.
USD/CAD: Additional ranges to contemplate