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USD/CAD retreats from 1.3700 on sharp decline in USD, with US inflation in focus

  • USD/CAD falls sharply from 1.3700 amid US Dollar weakness.
  • Investors look to US inflation for fresh guidance on interest rates.
  • Strong Canadian employment data compounds uncertainty over BoC rate cut prospects.

The USD/CAD pair pulls back sharply as it attempts to regain the resistance of the 1.3700 round level in the American session on Monday. The Canadian dollar is pressured by the sharp decline in the US dollar due to strong speculation that the Federal Reserve (Fed) will begin to reduce interest rates starting at the September meeting.

This has also improved investors' risk appetite. The S&P 500 opens positively, showing a cheerful sentiment in the market. The US Dollar Index (DXY), which tracks the greenback against six major currencies, remains weak near the crucial support of 105.00. The 10-year US Treasury yield falls sharply to 4.47%. Investors' growing confidence in the Fed returning to policy normalization is an unfavorable scenario for the US dollar and bond yields.

The US dollar is under pressure as weak April Non-Farm Payrolls (NFP) and higher-than-expected initial jobless claims for the week ending May 3 have dented investor confidence. in the strength of the labor market.

Meanwhile, investors are focused on US inflation data for April, due to be released on Wednesday. Higher-than-expected inflation data would neutralize the impact of lower hiring and lower wage growth in April and force traders to unwind their bets on rate cuts in September. Conversely, weak inflation data would further boost the Fed's rate cut prospects.

On the Canadian Dollar front, strong April employment data has triggered expectations for the Bank of Canada (BoC), which will pivot towards normalizing monetary policy starting with the 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%.

USD/CAD

Overview
Latest price today 1.3673
Today Daily Change 0.0000
Today's daily variation 0.00
Today's daily opening 1.3673
Trends
daily SMA20 1.3715
50 daily SMA 1.3622
SMA100 daily 1.3529
SMA200 Journal 1.3563
Levels
Previous daily high 1.3691
Previous daily low 1.3618
Previous weekly high 1.3763
Previous weekly low 1.3618
Previous Monthly High 1.3846
Previous monthly low 1.3478
Daily Fibonacci 38.2 1.3646
Fibonacci 61.8% daily 1.3663
Daily Pivot Point S1 1,363
Daily Pivot Point S2 1.3588
Daily Pivot Point S3 1.3558
Daily Pivot Point R1 1.3703
Daily Pivot Point R2 1.3733
Daily Pivot Point R3 1.3776

Source: Fx Street

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