The US dollar continues to rise against the Canadian dollar, focusing on the US CPI and the Bank of Canada's policies
The US producer price index fell back to 2.6% year-on-year in August, significantly below market expectations of 3.3% and down 0.1% month-on-month. The data strengthened market expectations for the Federal Reserve's September meeting to cut interest rates by at least 25 basis points, while the probability of a 50 basis point cut also rose to 12%.
The dollar has lost some support as a result, and the follow-up trend will be highly dependent on the consumer price index data released tonight.
Canada's unemployment rate rose to 7.1 per cent in August, up from 6.9 per cent, a sign of weakening economic momentum amid pressure from US tariffs. That raised expectations that the Bank of Canada would resume easing this month and limited the dollar's upside.
From the daily chart, the US dollar has ended positive against the Canadian dollar for three consecutive days, and is currently oscillating around 1.3870. The short-term key support level is at 1.3820. If it falls below this level, it may test the 1.3760 area, and further downward probes may point to the 1.3700 integer mark.Depu CapitalAnalysts believe that the technical aspects of the currency pair are still too high, but it is necessary to be vigilant against the risk of a pullback after overbuying.
On the upside, the initial resistance is at 1.3900. If it breaks through this level, it is expected to explore the 1.3950 to 1.3970 range, and the further target is looking at the 1.4000 psychological mark. In terms of technical indicators, the relative strength index has gradually entered the overbought area, suggesting that the exchange rate may face some pullback pressure in the short term.
Editorial opinion:
The current trend of the US dollar against the Canadian dollar is influenced by the policy expectations of the Federal Reserve and the Bank of Canada. If the US CPI data is weak, the US dollar may be pressured to pull back, and the exchange rate may fall below the 1.3820 support; if the data is strong, it is expected to push the exchange rate to break through the 1.3900 mark, and even test the 1.40 line. Short-term investors can pay attention to the breakthrough direction after the CPI is announced, and reasonably control risks.
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Disclaimer: The content of this article does not represent the views of the Institute of Foreign Exchange. The content is for reference only and does not constitute investment advice. Investors operate accordingly at their own risk.