Both the U.S. and Canada have inflation updates coming up this week, so I’m looking at this ongoing trend on USD/CAD.
Can we see a quick countertrend move before the big reports are printed, though?
The pair is currently cruising lower inside a falling channel on its hourly time frame and appears to be setting its sights back on the floor.
USD/CAD 1-hour Forex Chart by TV
Now the bottom of the channel lines up with S1 (1.3120), so buyers might be keen on defending support, which is right around last week’s lows, too.
Stochastic is indicating oversold conditions or exhaustion among sellers, and pulling higher would signal that dollar bulls are back in the game.
In that case, another bounce off support could take USD/CAD back to the mid-channel area of interest at 1.3150 or the top near today’s pivot point (1.3200) and a major psychological mark.
Expectations of weaker inflation figures from Canada might be enough to discourage Loonie bulls from charging ahead of the actual release. After all, significantly lower May CPI readings could be enough to convince the BOC to pause from hiking again.
As for the U.S. dollar, there’s not much in the way of top-tier releases today, so market sentiment might stay in the driver’s seat. So far, the Greenback is starting the week off on shaky footing while riskier holdings are in the green.
Do you think risk-off flows are about to return soon and spur another USD/CAD bounce?
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