- USD/CAD is trading in a tight range below 1.3700 ahead of crucial US economic data.
- US inflation data will influence Fed rate cut prospects for September.
- The USD/CAD pair is moving within a descending triangle pattern, suggesting indecision among investors.
The USD/CAD pair remains sidelined below the 1.3700 round resistance in the European session on Tuesday. The asset of the Canadian dollar consolidates while investors await the publication of the data of the Producer Price Index (PPI) and the Consumer Price Index (CPI) of the United States corresponding to the month of April, which will be published at 12 :30 GMT on Wednesday, respectively.
Inflation readings from US producers and consumers will provide new clues about the Federal Reserve's (Fed) inflation outlook. CME's FedWatch tool indicates that the September meeting will be the earliest the central bank will begin cutting interest rates.
Meanwhile, market sentiment is one of caution awaiting US inflation data. S&P 500 futures are flat in the European session. The US Dollar Index (DXY) bounces from the crucial support of 105.00.
The Canadian dollar remains firm as strong Canadian employment data for April has dented investor confidence that the Bank of Canada (BoC) will begin cutting interest rates from its June meeting. Statistics Canada reported that Canadian employers hired 90,400 job seekers in April, significantly above the consensus of 18,000. In March, the labor market recorded a layoff of 2,200 employees. The unemployment rate remains stable at 6.1%, while investors estimated that unemployment would rise to 6.2%.
The USD/CAD pair is oscillating within a descending triangle formation on the daily chart. The mentioned chart pattern is drawn from the April 16 high at 1.3846, while horizontal support is located from the March 19 high at 1.3614. The 20-day EMA at 1.3684 continues to act as a roadblock for the US Dollar bulls.
The 14-period RSI remains within the 40.00-60.00 range, suggesting a sharp contraction in volatility.
A new buying opportunity would arise if the asset breaks above the April 30 high at 1.3785. This would take the pair towards the April 17 high at 1.3838, followed by the round resistance level of 1.3900.
In an alternative scenario, a break below the May 3 low around 1.3600 would expose the pair to the April 9 low around 1.3547 and psychological support at 1.3500.
USD/CAD daily chart
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
