USD/CAD Appears Set to Arrest 4-Day Droop, Discovering Help on the 20-Day MA

USD/CAD PRICE, CHARTS AND ANALYSIS:

• The Loonie Seems to Have Run Out of Steam Forward of US CPI Launch.
• BoC Deputy Governor Points Warning Across the Potential of Renewed Value Pressures.
• IG Shopper Sentiment Information Exhibits Retail Merchants are Presently Web-Quick with 60% of Merchants Holding Quick Positions.
• To Study Extra About Value Motion,Chart PatternsandTransferring Averages, Try theDailyFX Training Sequence.

Learn Extra: The Financial institution of Canada: A Dealer’s Information

USDCAD is on the right track to snap a four-day shedding streak with assist being discovered on the 20-day MA. It’s been an fascinating couple of days for USDCAD following a break of the long run descending trendline that had been in play since October 2022. The current drop within the DXY and rise in Oil costs because of the ongoing Geopolitical tensions serving to facilitate a robust pullback within the pair of round 200-pips.

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FOMC MINUTES RELEASE WITH US CPI AHEAD

Earlier at present we had the US PPI knowledge and the Fed minutes launch with each danger occasions probably not offering US Greenback bulls with any consolation. The dovish rhetoric from Fed officers this week continues to drive the value motion on the DXY forward of the CPI print tomorrow.

Based mostly of feedback from Fed Officers this week I’m speculating that they would favor one other drop in inflation from tomorrows print. Fed Policymaker Rafael Bostic saying at present that ought to inflation stall then the Fed may have to do extra.

Trying on the Loonie and Financial institution of Canada (BoC) Deputy Governor Nicolas Vincent warned that provide shocks, restricted competitors and know-how might have shifted the pricing panorama completely. He commented additional that this might see corporations proceed to extend costs at bigger and extra fast charges which might current obstacles for the Central Financial institution to realize its inflation goal.

ECONOMIC CALENDAR AND EVENT RISK AHEAD

There may be not rather a lot when it comes to knowledge from Canada this week however subsequent week does deliver Canadian inflation knowledge. This ought to be an fascinating one given the feedback by the Deputy Governor of the BoC. The headline inflation got here in at 4% YoY in August with the Central Financial institution focusing on 1-3%. Any indicators of an uptick right here might present a problem for the BoC.

US Inflation tomorrow can be key with Rafael Bostic feedback hinting that the Fed wouldn’t need inflation to stall at present ranges. Headline inflation is predicted to return in at 3.6% a slight drop-off from final month’s print of three.7%. I’m certain the Fed would favor a drop within the headline print contemplating we now have had 2 consecutive months of will increase following a 3% print in June which appeared extraordinarily promising on the time.

US Inflation

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TECHNICAL ANALYSIS AND FINAL THOUGHTS

USDCAD

USDCAD regarded prepared for an even bigger transfer to the upside following the break of the descending trendline in play since October 2022. Nevertheless, having printed a brand new excessive and with the RSI in overbought territory a retracement shouldn’t have come as an entire shock.

USDCAD has discovered assist on the 20-day MA with the 50-day MA resting barely decrease at across the 1.3540 mark. We even have the ascending trendline which might come into play ought to we see a return of DXY weak spot following the US CPI launch tomorrow.

On the upside we now have rapid resistance on the 1.3650 deal with earlier than the current excessive round 1.3780 comes into focus. USDCAD tends to stay rangebound for extended durations and there’s a risk that we enter an identical section as soon as extra.

USD/CAD Each day Chart

Supply: TradingView, ready by Zain Vawda

IG CLIENT SENTIMENT

Taking a fast take a look at the IG Shopper Sentiment Information which reveals retail merchants are 60% net-short on USDCAD. Given the contrarian view adopted right here at DailyFX, is USDCAD destined to rise again towards the current excessive at 1.3780?

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— Written by Zain Vawda for DailyFX.com

Contact and observe Zain on Twitter: @zvawda