The USD/CAD pair has been trading in a narrow range recently, reflecting the consolidation of the US Dollar Index and the potential interest rate difference between Canada and the US. Canada’s volatile inflation and struggling labor market are putting pressure on the Bank of Canada (BoC) to make key decisions.
The USD/CAD pair is currently hovering between key moving averages, indicating a tight range that could lead to a breakout following the release of inflation data. Market expectations suggest a possibility of a rate cut by the BoC, which could impact the currency pair significantly.
The upcoming US inflation data is highly anticipated this week, with expectations that it will show a moderation in headline inflation to 3.1% in June from 3.3%. A result in line with or below this figure could influence the probability of a rate cut in the US, potentially affecting the USD/CAD pair.
From a technical standpoint, USD/CAD has been trading within a 50-pip range, with key resistance and support levels identified through moving averages. The current consolidation phase may precede a significant movement in the currency pair, especially after the inflation data is released.
Overall, the USD/CAD pair is closely tied to economic data releases and central bank decisions, with market participants eagerly awaiting potential catalysts for a breakout in the near future.