Friday, March 1, 2024

USD/CAD forms a bearish flag ahead of BoC decision, US CPI data

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exchange rate USD/CAD It rose after the latest US non-farm payrolls (NFP) data and the upcoming Bank of Canada (BoC) interest rate decision. The pair traded at 1.3500, just a few points above last week’s low of 1.3400.

Bank of Canada, US Inflation

The USD to CAD exchange rate reacted to the latest US NFP data. According to the Bureau of Labor Statistics (BLS), the U.S. economy added more than 236,000 jobs in March, up from 238,000 in the previous month. The unemployment rate fell to 3.5% from 3.6% previously, while the participation rate rose to its highest point before the pandemic.

The next major catalyst for the USD/CAD pair will be the upcoming US Consumer Price Index (CPI) data. Economists believe that inflammation It was at a high level in March. Specifically, core CPI is expected to remain at 5.2%, while core CPI is expected to rise to 5.9%.

The central bank indicated that these inflation numbers will be important as it will depend on data in the coming months. Inflation is a big part of the Federal Reserve because it is part of a dual mandate.

Other important CAD news The upcoming Bank of Canada decision is expected on Wednesday. Economists expect the bank to keep its interest rates on hold. The bank left interest rates at 4.50% in its last two meetings. It will continue with its quantitative easing, which it hopes will end by 2025.

USD/CAD Technical Analysis

USD/each

TradingView USD/CAD Chart

The 4H chart shows that the USD to CAD exchange rate has been on a slow upward trend for the past few days. It rose to 1.3530 from a low of 1.3400 on April 4. The pair has formed an ascending channel shown in black. At the same time, the Relative Strength Index (RSI) has moved above the neutral point of 50.

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USD/CAD is below its 50-period moving average. Hence, the pair is likely to continue falling as sellers target the next key support level at 1.3410. This price is 63 basis points below the current level.

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Bruno Lawrence
Bruno Lawrence
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