- USD/CAD climbs above 1.3550 amid uncertainty ahead of key events.
- Canadian inflation is forecasted to have accelerated in February.
- Investors will keenly focus on the Fed’s interest rate guidance.
The USD/CAD pair jumps to 1.3550 in Tuesday’s European session after breaking above the two-day consolidation formed in a range of 1.3510-1.3550. The Loonie asset advances as uncertainty ahead of key events has dampened risk appetite of market participants.
S&P500 futures have generated nominal losses in the London session, indicating a risk-aversion mood. The US Dollar Index (DXY) continues its winning spell for the fourth trading session and refreshes its weekly high at 103.87 amid uncertainty ahead of the interest rate decision by the Federal Reserve (Fed), which will be announced on Wednesday.
The CME FedWatch tool shows that the central bank is certain to keep interest rates unchanged in the range of 5.25%-5.50%. Investors will focus on cues about rate cuts by the Fed, which are currently expected in the June policy meeting.
Meanwhile, the next move in the Canadian Dollar will be guided by Canada’s Consumer Price Index (CPI) data for February, which will be published at 12:30 GMT. Annual headline inflation is expected to have grown at a higher pace of 3.1% compared to 2.9% recorded for January.
USD/CAD approaches the horizontal resistance of the Ascending Triangle pattern formed on a daily timeframe, plotted from December 7 high at 1.3620. The upward-sloping border of the aforementioned pattern is placed from December 27 low at 1.3177. The chart pattern exhibits a sharp volatility contraction.
The near-term appeal is bullish, as the 20-day Exponential Moving Average (EMA) near 1.3520 continues to support the US Dollar bulls.
The 14-period Relative Strength Index (RSI) oscillates inside the 40.00-60.00 range, indicating indecisiveness among investors.
The Loonie asset would observe a fresh upside if it breaks above December 7 high at 1.3620. This will drive the asset towards May 26 high at 1.3655, followed by the round-level resistance of 1.3700.
On the flip side, a downside move below February 22 low at 1.3441 would expose the asset to February 9 low at 1.3413. A breakdown below the latter would extend downside towards January 15 low at 1.3382.
USD/CAD daily chart
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