- The US dollar rises after US inflation figures, the DXY is approaching July highs.
- USD / CAD is still struggling to hold well above 1.2500.
- The focus is on Powell’s testimony and the Bank of Canada’s July meeting.
The USD / CAD It peaked after the start of the US session at 1.2539, driven by a stronger dollar due to higher than expected US inflation data. During the US session, the pair fell back towards 1.2500, cutting gains. The intraday bias continues to point to the upside.
Prices go up, the dollar goes up
The Consumer Price Index (CPI) rose 0.9% in June and at an annual rate of 5.4%, the highest level since 2008. The dollar jumped across the board following the figures that could raise expectations about a reduction in the program of Fed QE.
US yields initially spiked, but then fell back to the pre-report level. The pullback in yields eased the dollar’s bullish momentum.
Waiting for the BoC
The loonie is showing some weakness ahead of the Bank of Canada meeting. It is falling against currencies like the NZD and AUD, even as crude prices rise. The WTI barrel gains 1.60%, as it is trading above $ 75.30.
On Wednesday, the Bank of Canada will have its monetary policy meeting. The key rate is expected to remain unchanged. The focus is on the level of asset purchases and the guidance of the state. “We expect the Bank to slow the minimum asset purchase pace to C $ 2 billion per week, ahead of another C $ 1 billion reduction at the October meeting to C $ 1 billion as we move deeper. in 2022, “say Rabobank analysts.
Regarding the technical outlook, at Rabobank, they forecast the USD / CAD at 1.25 in a period of one month and at 1.26 in three months. “USD / CAD recently broke the 14-month downtrend that coincided with the end of a bullish cup and we expect the pair to test 1.2670 in the coming weeks.”
Technical levels
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