The USD/CAD pair is currently trading below the key resistance level of 1.3700 as investors await important US economic data. The upcoming release of the Producer Price Index (PPI) and Consumer Price Index (CPI) for April will provide insight into the Federal Reserve’s inflation outlook and potential rate cuts in September.
The market sentiment is cautious as investors await the US inflation data, with S&P 500 futures remaining flat and the US Dollar Index rebounding from support at 105.00. On the other hand, the Canadian Dollar has strengthened following strong job data for April, raising doubts about the Bank of Canada’s plan to lower interest rates in June.
USD/CAD is currently trading in a Descending Triangle pattern on a daily chart, with the 20-day Exponential Moving Average acting as a key resistance level. The Relative Strength Index (RSI) suggests a contraction in volatility.
A potential buying opportunity may arise if the pair breaks above the recent high at 1.3785, leading to further gains towards 1.3838 and 1.3900. Conversely, a breakdown below the recent low at 1.3600 could push the pair towards support levels at 1.3547 and 1.3500.
Overall, USD/CAD remains in a tight range below 1.3700 as investors await key economic data releases to provide direction for the pair’s next move.