Current trend

The USD/CAD pair is showing a moderate decline, returning to the "bearish" dynamics after an attempt at corrective growth the day before. The instrument is testing 1.3460 for a breakdown, while the markets are preparing for the Friday's publication of macroeconomic statistics on the price index of personal consumption expenditures at 14:30 (GMT 2), which is actively used by the US Federal Reserve in calculating average inflation and may affect market expectations regarding the pace of reduction in borrowing costs until the end of the year. Forecasts suggest an acceleration in the Core PCE in July from 2.6% to 2.7%, and in the PCE itself — from 2.5% to 2.6% year-on-year and from 0.1% to 0.2% month-on-month. Also, during the day, the market will receive July statistics on the dynamics of Personal Income and Spending of American households, where the Income indicator is likely to be fixed at 0.2% and the Spending one may grow from 0.3% to 0.5%.

Tomorrow, at 14:30 (GMT 2), Canada will release its June report on the dynamics of Gross Domestic Product (GDP) for the second quarter, which is the main indicator reflecting the state of the national economy, taking into account domestic consumption, investment, government spending and exports. A correction is expected from 0.2% to 0.1% on a monthly basis and from 1.7% to 1.6% on an annual basis, and on a quarterly basis the economy could add another 0.4%. In turn, analysts at BofA Global Research predicted that the Bank of Canada will cut the interest rate by 25 basis points to 4.25% at the meeting on September 4, citing persistent economic weakness, rising unemployment and a consistent trend towards slowing inflation, and thus the value will reach 3.75% by the end of this year and 3.00% by the end of 2025. In addition, experts are confident that the 2.0% growth in GDP in the second quarter at a seasonally adjusted annual rate still indicates a lack of stability in the economy.

Support and resistance

Bollinger Bands on the daily chart show a steady decline. The price range expands from below, making way for new local lows for the "bears". MACD is going down preserving a stable sell signal (located below the signal line). Stochastic has been in the oversold area for a long time, signaling in favor of the development of corrective growth in the near future.

Resistance levels: 1.3500, 1.3524, 1.3550, 1.3588.

Support levels: 1.3450, 1.3400, 1.3350, 1.3300.

Trading tips

Short positions may be opened after a breakdown of 1.3450 with the target at 1.3350. Stop-loss — 1.3500. Implementation time: 2-3 days.

A rebound from 1.3450 as from support followed by a breakout of 1.3500 may become a signal for opening new long positions with the target at 1.3588. Stop-loss — 1.3450.