USD/CAD bounces back after hitting fresh 2-week lows below 1.2800

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  • The USD/CAD pair is trading sideways again at the 1.2830 area after hitting two-week lows earlier in the session.
  • The pair is on track to end the week down around 0.5% amid dollar and Canadian CPI weakness.

The USD/CAD reached its lowest level in over two weeks at the 1.2775 area on Friday, although it was unable to make a sustained break below previous weekly lows at the 1.2780 area or even the 1.2800 level. At current levels near 1.2830, the pair is trading virtually unchanged on the day and is on track to drop around 0.5% on the week, which would mark the biggest weekly drop since March, with the pair now trading around a 2.0% below multi-month highs hit last week above 1.3050.

An improvement in global risk appetite on the last day of the week, after the People’s Bank of China eased financial conditions in the country with a surprise cut in its 5-year benchmark interest rate (called the prime rate loan), helped the pair trade with a negative bias. But the pair has also been weighed down this week by a combination of US dollar weakness and strong Canadian economic data.

As for the former, despite Federal Reserve policymakers being very bullish throughout the week, the dollar appears to be suffering from some profit-taking. Separately, news broke on Wednesday that Canada’s annual consumer price inflation rate had unexpectedly risen to a new multi-decade high of 6.8%, raising expectations that the Bank of Canada continued to tighten its monetary policy and boosted the loonie at that time.

Next week, Canadian Retail Sales data for April due out on Thursday will be closely scrutinized for the health of the Canadian consumer, but the main drivers for the USD/CAD pair will continue to be risk appetite , commodity prices and economic events in the United States. The PMIs for May will be released on Tuesday, the Minutes of the latest Federal Reserve meeting on Wednesday and the second estimate of US Q1 GDP growth on Thursday, followed by the PCE core inflation report from April, Friday.

Technical levels

USD/CAD

Panorama
Last Price Today 1.2856
Today’s Daily Change 0.0030
Today’s Daily Change % 0.23
Today’s Daily Opening 1.2826
Trends
20 Daily SMA 1.2866
50 Daily SMA 1.2697
100 Daily SMA 1.2692
200 Daily SMA 1.2659
levels
Previous Daily High 1.2894
Previous Daily Minimum 1.2783
Previous Maximum Weekly 1.3077
Previous Weekly Minimum 1.2893
Monthly Prior Maximum 1,288
Previous Monthly Minimum 1.2403
Daily Fibonacci 38.2% 1.2825
Daily Fibonacci 61.8% 1.2851
Daily Pivot Point S1 1.2775
Daily Pivot Point S2 1.2723
Daily Pivot Point S3 1.2664
Daily Pivot Point R1 1.2886
Daily Pivot Point R2 1.2945
Daily Pivot Point R3 1.2997

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Source: Fx Street

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