Current trend

During the Asian session, the USD/CAD pair is developing a “bullish” trend in the ultra-short term and is testing 1.3500 for a breakout. Market activity remains subdued, as markets in the US are closed for Labor Day.

The US core personal consumption expenditure price index remained at 2.6%, contrary to forecasts for growth of 2.7% YoY and 0.2% MoM. The broader indicator was 2.5% YoY as before and accelerated from 0.1% to 0.2% MoM. It increases the likelihood of a –50 basis point change in the US Fed interest rate at the September meeting, although it is still considered an alternative scenario. The main one assumes an adjustment of the standard –25 basis points.

The Q2 Canadian gross domestic product (GDP) accelerated from 1.8% to 2.1% YoY, better than the preliminary estimates of 1.6% and from 0.4% to 0.5% QoQ. The indicator slowed from 0.2% to 0.0% MoM. The positive dynamics are developing against an increase in government spending, business investment in engineering structures, machinery, and equipment, as well as household spending on services. However, exports and the housing sector reflected a decline. Earlier, Bank of Canada Governor Tiff Macklem said the regulator was adjusting interest rates to restore the economy. Soon, investors wait for the results of the interest rate meeting on Wednesday at 15:45 (GMT 2). Experts expect a reduction in the cost of borrowing by 25 basis points to 4.25%, putting pressure on the national currency.

Support and resistance

On the daily chart, Bollinger bands are decreasing. The price range is narrowing from below, remaining spacious for the current market activity. The MACD indicator reversed towards growth, forming a buy signal (the histogram is above the signal line). Stochastic is in the center of the working area, reflecting the likelihood of the “bullish” dynamics in the ultra-short term.

Resistance levels: 1.3500, 1.3524, 1.3550, 1.3588.

Support levels: 1.3450, 1.3400, 1.3350, 1.3300.

Trading tips

Long positions may be opened after a breakout of 1.3500, with the target at 1.3600. Stop loss — 1.3450. Implementation period: 2–3 days.

Short positions may be opened after a rebound from 1.3500 and a breakdown of 1.3450, with the target at 1.3350. Stop loss — 1.3500.