The USD/CAD pair is currently trading above 1.3700 amidst uncertainties surrounding the timing of potential Fed rate cuts. US consumers have been cutting back on discretionary spending, indicating a decrease in purchasing power. On the other hand, Canadian Retail Sales are expected to show positive growth.
The Federal Reserve has indicated a potential rate cut this year, while markets are anticipating two rate cuts due to recent economic data showing progress in disinflation and reduced consumer spending. The US Dollar Index is trading sideways around 105.20 as expectations for Fed rate cuts limit the USD’s upside.
Investors are eagerly awaiting the release of Canadian Retail Sales data for April, with expectations of a 0.7% increase after three consecutive months of contraction. The USD/CAD pair continues to consolidate within a range of 1.3600-1.3800, with the Loonie asset holding the 200-day Exponential Moving Average, suggesting a bullish trend.
The Relative Strength Index indicates indecisiveness among market participants, with potential for a buying opportunity if the asset breaks above the April 17 high at 1.3838. On the other hand, a breakdown below the June 7 low at 1.3663 could lead to a decline towards lower support levels.
Overall, the USD/CAD pair remains in a consolidation phase, with key levels to watch for potential breakout or breakdown movements. Investors are closely monitoring economic data releases and Fed rate cut expectations to gauge future movements in the currency pair.