Current trend

The USD/CAD pair shows a moderate decline, again testing 1.3500 for a breakdown. Trading participants are in no hurry to open new positions, waiting for new drivers to appear on the market.

In particular, today the focus of trading participants will be the publication of the minutes of the latest meeting of the US Federal Reserve, which are likely to strengthen the "hawkish" sentiment regarding the imminent adjustment of borrowing costs. According to the Chicago Mercantile Exchange (CME Group) FedWatch Tool, the probability of an interest rate cut during the May meeting is estimated at 36.0%, while at the beginning of the month this figure was above 60.0%. Now more and more analysts are confident that changes to monetary policy will be made in June, although some of them do not rule out a later date. It is expected that in 2024 the American regulator will adjust the interest rate by a maximum of 1.0% in total.

Tomorrow investors will monitor January macroeconomic statistics on business activity in the EU and the US. Forecasts suggest a decline in the US Services PMI from S&P Global from 52.5 points to 52.0 points, and in the Manufacturing PMI from 50.7 points to 50.5 points.

Meanwhile, the position of the Canadian currency came under pressure the day before after the publication of January inflation data: thus, the annual Consumer Price Index decreased from 3.4% to 2.9%, while analysts expected 3.3%, and in monthly terms the indicator amounted to 0.0% after -0.3% in the previous month with a forecast of 0.4%. The Core CPI from the Bank of Canada slowed down from 2.6% to 2.4%, reflecting the effectiveness of measures taken by financial authorities to tighten monetary parameters.

Support and resistance

Bollinger Bands on the daily chart show moderate growth. The price range is narrowing, reflecting mixed trading in the short term. MACD is growing preserving a weak buy signal (located above the signal line). Stochastic again reversed towards growth, interrupting the confident decline formed at the end of the last trading week.

Resistance levels: 1.3550, 1.3600, 1.3650, 1.3700.

Support levels: 1.3500, 1.3450, 1.3400, 1.3350.

Trading tips

Short positions may be opened after a breakdown of 1.3450 with the target at 1.3350. Stop-loss — 1.3500. Implementation time: 2-3 days.

The return of the "bullish" trend with the breakout of 1.3550 may become a signal for new purchases with the target of 1.3650. Stop-loss — 1.3500.