Current trend

The USD/CAD pair shows moderate growth, developing a "bullish" momentum in the area of 1.3221, formed the day before, when the instrument retreated from its September 2022 all-time lows.

The US currency is supported by macroeconomic statistics published on Tuesday, as well as growing expectations regarding further tightening of monetary policy by the US Federal Reserve. New Home Sales in May added 12.2% after rising by 3.5% in the previous month, while analysts expected a slowdown in dynamics to 0.5%, and the Housing Price Index accelerated in April from 0.5% to 0.7% with a forecast of 0.3%.

In turn, the Canadian dollar reacted negatively to yesterday's publication of statistics from Canada. The Consumer Price Index in annual terms in May slowed down from 4.4% to 3.4%, the lowest since June 2021, which fully coincided with analysts' forecasts, and in monthly terms it went down from 0.7% to 0.4%, falling below the expected 0.5%. The Core CPI over the same period corrected from 4.1% to 3.7% on an annualized basis and from 0.5% to 0.4% on a monthly basis. Statistics Canada reported that the current dynamics is mainly associated with a decrease in the cost of gasoline compared to last year, while food inflation has not yet corrected: in May, food prices rose by 9.0% year on year, showing a slight improvement compared to the previous month.

Thus, in general, the indicators are rapidly approaching the target levels of the Bank of Canada, so the regulator probably will not tighten its monetary policy at the July 12 meeting.

Support and resistance

Bollinger Bands on the daily chart show a steady decline. The price range is narrowing from below, reflecting a sharp change of trend in the short/ultra-short term. MACD has reversed to growth having formed a new buy signal (located above the signal line). Stochastic is showing similar dynamics being located in the middle of its area.

Resistance levels: 1.3250, 1.3300, 1.3350, 1.3400.

Support levels: 1.3200, 1.3150, 1.3100, 1.3050.

Trading tips

Long positions can be opened after a breakout of 1.3250 with the target of 1.3350. Stop-loss — 1.3200. Implementation time: 2-3 days.

A rebound from 1.3250 as from resistance, followed by a breakdown of 1.3200 may become a signal for opening of new short positions with the target at 1.3100. Stop-loss — 1.3250.