USD/CAD STEADIES NEAR 1.3930 AFTER TWO-MONTH LOW AS US CPI TAKES CENTER STAGE
USD/CAD traded around 1.3930 during Wednesday’s Asian session, stabilizing after falling to 1.3915, its lowest level since June 10, during the recent three-session decline.
Market attention now turns to the latest US inflation figures. The Consumer Price Index is due Wednesday, followed by the Producer Price Index on Thursday. These releases may influence expectations for the Federal Reserve’s policy path and, in turn, near-term movements in the US Dollar and USD/CAD.
According to CME FedWatch data cited in the supplied commentary, markets currently price a greater than 75% probability of at least one Federal Reserve rate increase by the end of the year. This keeps US interest-rate expectations an important factor for Dollar demand ahead of the inflation releases.
At the same time, stronger crude oil prices remain relevant for the Canadian Dollar. Oil reached a one-and-a-half-week high on Tuesday, providing support to the commodity-linked Canadian currency and helping limit the recent recovery in USD/CAD.
From a technical perspective, USD/CAD is trading just above its 100-day SMA at 1.3919, with the 50.0% Fibonacci retracement at 1.3898 providing another nearby reference. On the upper side, the 38.2% Fibonacci level at 1.3980 is the nearest resistance reference, followed by 1.4081 and the broader cycle high near 1.4244.
If the pair moves below the 1.3919–1.3898 area, the next lower technical references identified in the supplied analysis are the 61.8% Fibonacci level at 1.3817, followed by 1.3701 and 1.3553.
Market participants will continue to monitor US inflation, Federal Reserve rate expectations and crude oil prices, with the 1.3898–1.3980 area providing important near-term technical references for USD/CAD.
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