Current trend

The USD/CAD pair has been actively growing since the beginning of this month and is currently testing the 1.3793 mark (Murrey level [5/8]).

The Canadian currency is under pressure against the background of the September inflation data published on the eve: the consumer price index (CPI) decreased from 2.0% to 1.6% YoY, while the core indicator increased from 1.5% to 1.6%. Thus, consumer inflation has shown minimal growth since February 2021, which, along with weak business activity, gives experts reason to believe that next week the Bank of Canada will cut the key rate again, and by 50 basis points at once, not by 25 basis points, as before.

On the other hand, most market participants expect the US Federal Reserve to slow down the pace of monetary policy easing, which supports the US currency. Recall that in September, unemployment fell to 4.1%, and employment growth amounted to a noticeable 254.0 thousand, while inflation reached 2.4% with preliminary estimates of 2.3%. These statistics give representatives of the American regulator less and less reason for a sharp reduction in interest rates. Moreover, the risks of accelerating consumer price growth may become the basis for the US Federal Reserve to limit itself to only one reduction in the cost of borrowing by 25 basis points by the end of the year instead of two previously expected. Today, the president of the Atlanta Federal Reserve Bank (FRB), Raphael Bostic, directly spoke about this possibility.

Thus, the continued growth of the USD/CAD pair in the medium term seems to be a more likely scenario.

Support and resistance

Technically, the asset is testing the 1.3793 mark (Murrey level [5/8]), the breakout of which will ensure an intensification in upward dynamics to the levels of 1.3916 (Murrey level [6/8]) and 1.4038 (Murrey level [7/8]). The key mark for the "bears" is 1.3671 (Murrey level [4/8]), the breakdown of which will allow the quotes to continue their decline to the targets of 1.3549 (Murrey level [3/8]) and 1.3427 (Murrey level [2/8]).

Technical indicators confirm the formation of an uptrend: Bollinger Bands are reversing up, MACD is increasing in the positive zone, and Stochastic is preparing to exit the overbought zone, which does not exclude a decline, but its potential is seen as limited.

Resistance levels: 1.3793, 1.3916, 1.4038.

Support levels: 1.3671, 1.3549, 1.3427.

Trading tips

Long positions can be opened above 1.3793 with targets of 1.3916, 1.4038 and a stop-loss around 1.3700. Implementation period: 5–7 days.

Short positions should be opened below the level of 1.3671 with targets of 1.3549, 1.3427 and a stop-loss around 1.3750.