The USD/CAD pair is testing a key area of interest before the US releases its June inflation reports.
Will the pair stay within its current range?
Or is it ready to go?
USD/CAD currency pair on 4-hour chart Chart by TradingView
The US dollar has been losing ground against its Canadian counterpart for weeks, helped by improved risk sentiment, higher prices for crude oil – one of Canada’s biggest exports – and increased bets on a Federal Reserve rate cut.
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The USD/CAD pair, which turned lower from the psychological level of 1.3800 in mid-June, is now trading near the 1.3600 area. As you can see, the current pair prices are also in line with the S1 pivot point line (1.3589) as well as the 100 and 200 simple moving averages on the 4-hour time frame.
Will the pair stay within its months-long range over the next few days?
The US CPI report is due later today and the US PPI and University of Michigan consumer confidence data are due on Friday, and could provide both the USD bulls and bears with enough motivation to push the USD/CAD pair in either direction.
Steady higher price pressures and resilient consumer confidence could push USD/CAD higher from the 1.3600 area. Look for bullish candles above 1.3600 which could lead to a retest of the 1.3690 mid-range and pivot point line.
But if market themes this week encourage more dollar selling, the USD/CAD pair could fall below its range.
Strong bearish candles followed by sustained trading below the 1.3600 level could lead the pair to retest lower interest areas such as 1.3500 or 1.3450.
What do you think? Which direction will the USD/CAD pair go in the next few days?