The USD/CAD pair has rebounded strongly after a positive US preliminary S&P Global PMI report for June. Canadian Retail Sales also grew as expected by 0.7%. The Federal Reserve is anticipated to implement two rate cuts this year.
The USD/CAD pair has recovered from an 11-day low near 1.3670 during Friday’s American session. The US Dollar has strengthened following the upbeat US S&P Global PMI data for June, which showed that the Composite PMI exceeded expectations, indicating a stronger economic activity.
The US Dollar Index (DXY) has surged to a six-week high near 105.90, reflecting the Greenback’s value against major currencies. However, there is uncertainty surrounding the US Dollar’s future as investors anticipate the Fed to lower interest rates starting from the September meeting. While market participants expect two rate cuts this year, Fed policymakers are divided on the matter.
On the other hand, the Canadian Dollar remained largely unchanged as Canada’s Retail Sales for April met expectations of a 0.7% month-on-month growth. This positive data comes after three consecutive months of declining retail sales.
USD/CAD is currently trading within a Symmetrical Triangle chart pattern, indicating a potential volatility contraction. Prices are hovering around the 20-day Exponential Moving Average (EMA) near 1.3700, suggesting a sideways trend. The 14-period Relative Strength Index (RSI) reflects market indecisiveness.
A buying opportunity may arise if the asset surpasses the April 17 high at 1.3838, potentially pushing it towards the November 2023 high at 1.3900 and the psychological resistance level of 1.4000. Alternatively, a breakdown below the June 7 low at 1.3663 could expose the asset to lower levels around 1.3600 and 1.3547.
In conclusion, the USD/CAD pair has shown resilience amidst economic indicators and market expectations. Traders are advised to closely monitor key levels for potential trading opportunities.