The USDCAD currency pair has consolidated near the weekly high amid investors’ expectations of today’s publication of the latest US Federal Reserve meeting minutes to determine the future trajectory of interest rates.
Traders’ attention is also focused on the Consumer Price Index (CPI) data released on Thursday and the Producer Price Index (PPI) anticipated to come out on Friday.
According to Boston Fed President Susan Collins, the slowdown in inflation is making further interest rate cuts by the central bank more probable.
According to the CME FedWatch tool, the probability of a 50 basis point rate cut at the Fed’s next meeting has been ruled out following the release of a strong jobs report. Currently, the probability of a 25 basis point rate cut is estimated at 89%.
Meanwhile, Fed Vice Chair Philip Jefferson noted that economic activity is still growing at a robust pace. At the same time, inflation has declined significantly, and the labor market is no longer showing signs of overheating.
The US dollar is holding steady near the multi-week high reached last Friday, amid waning chances of an increasingly aggressive rate cuts by the US financial regulator.
Meanwhile, Canadian unemployment data will also be in focus on Friday as investors await clues on the Bank of Canada’s monetary policy decision later this month.
On the technical side, the USDCAD currency pair quotes are showing formation of a new upward trend after the price exited the descending local corridor on the H4 timeframe. Bulls Power and Bears Power indicators (standard values) are in the positive zone, confirming the formation of the trend towards buying.
Signal:
Short-term prospects of the USDCAD pair suggest buying.
The target is located near the level of 1.3840.
Part of the profit should be taken near the level of 1.3740.
The stop loss is located near the level of 1.3540.
The bullish trend is of short-term nature, so it is worth choosing the trading volume of no more than 2% of your balance.
