The USD/CAD pair had a slightly bearish week but closed above its lows. Powell noted that inflation was on a downtrend, and US consumer inflation data showed a bigger-than-expected easing in price pressures. However, US wholesale inflation figures came in higher than expected, leading to a slight recovery in the dollar.
Next week, the US will release a retail sales report, while Canada will release inflation and retail sales figures. The recent reports have shaped the Fed’s rate cut outlook, with a likelihood of a September cut rising to 93%. If retail sales ease, there will be more certainty about a rate cut in September.
Canada’s inflation report will also impact BoC rate cut bets. If inflation spikes again, the central bank might not cut in July. However, if it eases, chances of a cut will go up.
On the technical side, the USD/CAD price is challenging the 1.3601 key support level. The bias is bearish, with the price trading below the 22-SMA and the RSI below 50 in bearish territory. The price is caught in a sideways move between the 1.3601 support and the 1.3800 resistance, with a potential for a reversal if the price breaks below the support level.