The week kicked off with a robust US dollar, fueled by the market’s reaction to Trump’s recent pick for Treasury Secretary.
Canada’s inflation surpassed predictions, increasing by 0.4% compared to the anticipated 0.3%.
Canadian retail sales witnessed a 0.4% uptick in September.
Now, diving into the USD/CAD landscape, we’ve seen a rebound in the pair as the dollar gained momentum following Trump’s selection for Treasury Secretary. Despite this, the pair still lingered close to the lows we observed last week when the Canadian dollar soared due to promising economic data. If you’re keen on expanding your knowledge about forex options trading, be sure to check out our comprehensive guide.
Starting strong, the dollar surged at the week’s onset in response to Trump’s choice for Treasury Secretary. The nomination of Scott Bessent, a known advocate for Trump’s tariff ideas and a supporter of a stronger dollar, has sent bullish signals for the currency.
Investors are closely watching how things unfold in the US following Trump’s victory. With his new administration set to begin in January, policy changes could be on the horizon. Analysts highlight that with Republicans controlling most seats in Congress, Trump’s potential to implement changes is significantly heightened.
Meanwhile, north of the border, the Canadian dollar has lost some of its sheen from last week yet remains elevated. The previous week was kind to the loonie, with positive economic data casting doubt on the need for another hefty rate cut in December. After the Bank of Canada slashed borrowing costs by a substantial 50 basis points in October, largely due to sluggish economic growth, policymakers hinted at further reductions, causing markets to brace for more action.
Yet, recent data showed a pleasant twist with inflation rising by 0.4%, outpacing expectations of 0.3%. Retail sales also climbed by 0.4% in September, and core figures rose by 0.9%. Analysts even foresee a 0.7% boost in October. Such upbeat data has led markets to reconsider the likelihood of another 50 basis point cut in December.
### USD/CAD Key Events Today
As the week begins, traders don’t seem to anticipate significant reports from Canada or the United States, so the market activity might start slow.
### USD/CAD Technical Outlook: Bears Preparing for a Drop Below 1.3951
Examining the technical side, USD/CAD has stalled near the 1.3951 support level. However, the overall leaning is bearish since it currently trades below the 30-SMA, with the RSI indicating bearish sentiment. The trend reversed recently when the price reached the 1.4100 resistance level. Interested in learning about scalping forex brokers? Our detailed guide is worth checking out.
Bears confirmed a reversal by breaking below the 30-SMA and the upward trendline. However, to keep the bearish momentum rolling, they need to establish lower highs and lows. Hence, USD/CAD might breach the 1.3951 mark to test the 1.3850 support level.
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