Canadian Dollar Struggles On Bullish Dollar

Fundamental Analysis

* Dollar Dominance: The Canadian Dollar faces challenges in maintaining its gains as the U.S. Dollar strengthens, driven by increasing skepticism about the pace of Federal Reserve rate cuts. Speculation is mounting that the Fed might adopt a more gradual approach to easing rates. Chicago Fed President Austan Goolsbee suggested on Thursday that a slower pace of rate cuts could be reasonable, given inflation’s downward trajectory toward the 2% target. Furthermore, market expectations around policies proposed by Trump—such as tax cuts, trade tariffs, and deficit spending—could potentially ignite a new wave of inflation, prompting the Fed to decelerate its rate reduction plans.

Technical Analysis

* Technical Breakout: USDCAD was traded higher following prior rebound from the support level 1.39550. MACD which illustrate diminishing bearish momentum signal suggest the pair to likely extend its rebound.

* Resistance and Support: If the bullish momentum persists, there’s a strong likelihood that the price will potentially rebound towards the level 1.40800. Conversely, a potential reversal is also to be expected and the price could head back towards 1.38400 after it breach below the level 1.39550.

Understand how technical analysis can help you in this trading opportunity.

Potential Risks

With little significant U.S. economic data, investors are focus on the upcoming data from the Canada which includes Core Retail Sales and Manufacturing Sales to gauge further sentiment for the Loonie.

Know how to manage trading risks with risk management strategies.

Monitoring

Stay updated on US and Canada data, central bank updates and any shifts in the US Dollar’s strength. by following PU Prime’s market insights and daily financial news.

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Disclaimer: Trading derivatives involves high risks, and market conditions can change rapidly. The content is for informational purposes only and should not be considered as financial advice. Traders should conduct their own research and consider risk management strategies.