Current trend

The USD/CAD pair is showing mixed dynamics, consolidating near 1.3740. Market activity remains subdued as trading participants await the release of key macroeconomic statistics from the United States.

Today at 14:30 (GMT 2), data on producer inflation will be released: forecasts suggest a slowdown in the Core PPI in July from 3.0% to 2.7%, and in the PPI — from 2.6% to 2.3%. Tomorrow, the market will receive statistics on the Consumer Price Index: analysts expect the indicator to decrease from 3.0% to 2.9% in annual terms, and in monthly terms, growth of 0.2% is expected after –0.1%, while the Core CPI excluding Food and Energy may adjust from 3.3% to 3.2%, which is still above the target of 2.0-3.0%. Despite this, in September, with a high degree of probability, the US Federal Reserve will still soften monetary parameters, which will put noticeable, but short-term pressure on the position of the American currency. However, the size of the upcoming interest rate adjustment is still uncertain: if the regulator cuts the value by 50 basis points, the market reaction may be more pronounced, but at present most investors are counting on three cuts in borrowing costs by the end of the year, the first of which could be –50 basis points instead of the –25 basis points previously assumed. According to the Chicago Mercantile Exchange (CME Group) FedWatch Tool, this probability is currently estimated at 51.5% and 48.5%, respectively.

Investors from Canada, in turn, are assessing the July report on the labor market, presented at the end of last week, which reflected a decrease in the Net Change in Employment by 2.8 thousand after –1.4 thousand in the previous month, while analysts expected an increase of 22.5 thousand. In addition, Average Hourly Wages slowed down sharply from 5.6% to 5.2%, while the Unemployment Rate remained unchanged at 6.4%, contrary to expectations of an increase to 6.5%.

Support and resistance

Bollinger Bands in D1 chart demonstrate a moderate decrease. The price range expands from below, making way for new local lows for the "bears". MACD is declining keeping a weak sell signal (located below the signal line). In addition, the indicator tests the zero level for the breakdown. Stochastic, having retreated from its lows, is trying to reverse upwards, indicating the risks of corrective growth in the ultra-short term.

Resistance levels: 1.3765, 1.3800, 1.3830, 1.3864.

Support levels: 1.3717, 1.3700, 1.3675, 1.3650.

Trading tips

Short positions may be opened after a breakdown of 1.3717 with the target at 1.3650. Stop-loss — 1.3750. Implementation time: 2-3 days.

The development of the "bullish" trend with the breakout of 1.3765 may become a signal for opening long positions with the target of 1.3830. Stop-loss — 1.3735.