USD/CAD Price Analysis: Trades in tight range above 1.3600 ahead of US Inflation


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  • USD/CAD
    stays
    sideways
    near
    1.3600
    with
    US
    inflation
    in
    focus.

  • The
    core
    CPI
    is
    estimated
    to
    have
    grown
    steadily
    by
    3.4%
    on
    monthly
    as
    well
    as
    annual
    basis.

  • Easing
    Canadian
    labor
    market
    conditions
    boost
    BoC’s
    rate-cut
    prospects.


The
USD/CAD
pair

consolidates
in
a
tight
range
above
the
round-level
support
of
1.3600
in
Thursday’s
European
session.
The
Loonie
asset
turns
sideways
as
investors
await
the

United
States

(US)
consumer
inflation
data
for
June,
which
will
be
published
at
12:30
GMT.

The
US

Consumer
Price
Index

(CPI)
report
is
expected
to
show
that
annual
and
monthly
core
inflation,
which
excludes
volatile
food
and
energy
prices,
grew
steadily
by
3.4%
and
0.2%,
respectively.
Annual
headline
inflation
is
estimated
to
have
decelerated
to
3.1%
from
3.3%
in
May.

The
inflation
data
will
exhibit
the
strength
in
the
market
speculation
for
the

Federal
Reserve

(Fed)
to
begin
reducing
interest
rates
from
the
September
meeting.
Ahead
of
the
US
inflation
data,
the
US
Dollar
Index
(DXY),
which
tracks
the
Greenback’s
value
against
six
major
currencies,
remains
on
the
backfoot
around
105.00.

Meanwhile,
the
Canadian
Dollar
is
under
pressure
amid
growing
speculation
that
the
Bank
of
Canada
(BoE)
will
deliver
subsequent
rate
cuts.
Deteriorating
Canadian
labor
market
conditions
have
boosted
expectations
of
more
rate
cuts
by
the
BoE.

USD/CAD
exhibits
a
sheer
volatility
contraction,
trading
in
a
limited
range
of
1.3600-1.3780
for
more
than
two
months.
A
volatility
contraction
suggests
lower
volume
and
small
ticks,
while
a
breakout
in
the
same
results
in
wider
ticks
and
heavy
volume.

The
asset
trades
below
the
20-day
Exponential
Moving
Average
(EMA)
near
1.3663,
suggesting
that
the
near-term

outlook

is
bearish.

The
14-period
Relative
Strength
Index
(RSI)
oscillates
inside
the
40.00-60.00
range,
indicating
indecisiveness
among
market
participants.

A
decisive
breakdown
below
May
3
low
around
1.3600
will
expose
the
asset
to
April
9
low
around
1.3547
and
the
psychological
support
of
1.3500.

On
the
flip
side,
a
fresh
buying
opportunity
would
emerge
if
the
asset
breaks
above
June
11
high
near
1.3800.
This
would
drive
the
asset
towards
April
17
high
at
1.3838,
followed
by
1
November
2023
high
at
1.3900.

USD/CAD
daily
chart


Economic
Indicator

Consumer
Price
Index
(YoY)

Inflationary
or
deflationary
tendencies
are
measured
by
periodically
summing
the
prices
of
a
basket
of
representative
goods
and
services
and
presenting
the
data
as
The
Consumer
Price
Index
(CPI).
CPI
data
is
compiled
on
a
monthly
basis
and
released
by
the

US
Department
of
Labor
Statistics
.
The
YoY
reading
compares
the
prices
of
goods
in
the
reference
month
to
the
same
month
a
year
earlier.The
CPI
is
a
key
indicator
to
measure
inflation
and
changes
in
purchasing
trends.
Generally
speaking,
a
high
reading
is
seen
as
bullish
for
the
US
Dollar
(USD),
while
a
low
reading
is
seen
as
bearish.



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