Buying USDCAD on divergent data from US and Canada

The US Personal Consumption Expenditures (PCE) indices for July and Canada’s GDP for the second quarter (Q2) are set to be published today at 12:30 GMT. These releases will occur simultaneously, providing traders with an opportunity to open a favorable position in USDCAD in case of divergent macroeconomic trends between the two countries. Depending on the outcome, investors may look to buy or sell the pair. From a technical perspective, it is more preferable to open a buy position, as the most evident target lies above the current quote level, and no clear sell signals are currently present. An unclosed price gap also supports the bullish case, acting as a magnetic pull for USDCAD. It is marked by a blue rectangle on the chart. The lower boundary of the support/resistance zone at 1.38130 will probably be the nearest target. The pair has previously pushed off this level both up and down (green and pink rectangles).

For the buying scenario to unfold, the following data combination is anticipated: the US PCE should come in above forecasts, while Canada’s Q2 GDP should be worse than expected. Under these conditions, strong bullish momentum in USDCAD would be highly likely.

The overall recommendation is to buy USDCAD if the US PCE index exceeds market projections and Canada’s Q2 GDP falls short of expectations. Profits should be taken at the level of 1.38130. Stop Loss could be set at 1.37250.

The volume of the open position should be calculated so that the potential loss (protected by a Stop Loss order) does not exceed 1% of your deposit. If your account balance does not allow opening a position of this size, it is better to avoid entering the market on this signal and wait for other trade options that meet low-risk criteria.