USDCAD pair forms corrective ascending corridor

18 August 2023 171
USDCAD pair forms corrective ascending corridor

The U.S. dollar is going through its fifth successful week of gains against major currencies. The trend is the longest in the last 15 months as a robust American economy has strengthened the rationales for the Fed to keep interest rates high.


Minutes from the Fed's July meeting showed that most policymakers continue to prioritize fighting inflation. At the same time, some participants spoke that the significant rate hikes could be a risk to the economy.


The number of Americans filing for unemployment benefits fell last week. This indicates continued labor market tightness, even considering the slowdown in employment growth.


Investors now wait for Fed Chairman Jerome Powell's speech on the economic outlook. The annual meeting of officials of regional financial regulators will be held on August 25, as usual, in Jackson Hole, Wyoming.


On Tuesday, it was reported that the Canadian inflation rate grew to 3.3% in July. The rate was higher than expected. At the same time, the main data being at the center of the Bank of Canada attention remains stable. It increases the likelihood of another interest rate hike.


According to the statistical agency of Canada, the consumer price index (CPI) rose by 0.6%, which is twice as much as the forecasted growth of 0.3%. The average of the two key measures of core inflation targeted by the central bank averaged 3.65%, slightly below 3.70% in June.


Money markets raised stakes that the Bank of Canada will increase its key rate by 25 points in September. Expectations of tighter monetary policy could boost the value of the Canadian currency.


Quotations of the USDCAD pair form an upward trend.


The Relative Strength Index indicator (standard values) shows divergence on the H1 timeframe. This divergence gives a leading signal for the trend reversal. Soon, a rebound from the local trend resistance towards the ascending support line may occur. The price is in the range of profitable sales.


Signal:

Short-term prospects for USDCAD are selling.

Target is at the level of 1.3475.

Part of the profit should be fixed around the level of 1.3575.

Stop-loss is around the level of 1.3600.


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.

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