On Thursday, the dollar index declined after the expected interest rate hikes made by the Fed. Investors are currently evaluating the fairly balanced comments from Chairman Jerome Powell.
The Fed raised interest rates by a quarter of a percentage point on Wednesday, setting the benchmark rate in a range of 5.25 – 5.50%. At the same time, the regulator indicated the probability of another hike in September based on a wide range of data. The regulator's concretized monetary plan has reduced interest in the U.S. dollar (USD) as the global monetary tightening cycle may soon come to an end.
Fed Chairman Jerome Powell also emphasized the difficulties of economic slowdown, but he doesn’t envisage the onset of recession. From his perspective, the labor market should weaken for inflation to return to the 2% target by right.
Today traders expect the publication of data on the U.S. GDP for the second quarter with a forecast of a decline to 1.8% from the previous value of 2%. Confirmation of the forecast may reduce the value of the USD. The news will be released at 12:30 GMT.
In addition, data on the jobless claims 4-week average, the balance of foreign trade in goods, and real consumer spending will be published with expectations of deterioration in statistical submitters.
Canada will also release GDP data on Friday. The month-over-month figure is expected to grow by 0.4%, which is positive for the Canadian Dollar (CAD). The news will be released on July 28 at 12:30 GMT.
The USDCAD pair quotes forms of the third descending wave on the H4 timeframe. The breakdown of the top of the first wave at 1.3110 has already happened. The downward movement may increase in the near term. The near support is at 1.3090.
The Relative Strength Index indicator (standard values) confirms the current short-term downward direction of the pair in convergence.
Signal:
Short-term prospects for AUDCAD are selling.
Target is at the level of 1.3090.
Part of the profit should be fixed around the level of 1.2920.
Stop-loss is around the level of 1.3330.
The bearish trend is short-term, so choose a trading volume of no more than 2% of your balance.
This content is for informational purposes only and is not intended to be investing advice.
