Current trend

The USD/CAD pair is correcting upwards in the area of 1.3812 amid strengthening US dollar quotes.

The Canadian currency failed to gain sufficient support after the Bank of Canada's decision to cut its interest rate by 25 basis points from 4.75% to 4.50%, which came amid positive outlook for key indicators for the rest of the year: officials expect Gross Domestic Product (GDP) growth to be 1.4% in 2024, accelerating to 2.1% and 2.4% in 2025 and 2026, respectively. Another factor that influenced the regulator's rhetoric was inflation, which fell to 2.7% in June: officials noted the weakening of price pressure, which has been below 3.0% for three months now, which allows for a smooth easing of monetary policy. In the second half of this year, the Core Consumer Price Index is expected to decline to 2.5%, which will be enough to keep borrowing costs at 4.50%.

In turn, the US Federal Reserve is only preparing to adjust the interest rate, and the political situation associated with uncertainty amid the withdrawal of the candidacy of the current President Joe Biden from the November elections has switched the attention of investors from the economic agenda to political issues, so the quotes of the American currency are held in the area of 104.00 in USDX, practically unchanged from the levels of the beginning of the week. However, statistics showed the national economy grew 2.8% in the second quarter after increasing 1.4%, and the number of Initial Jobless Claims for the week ending July 19 was adjusted to 235.0 thousand from 245.0 thousand.

Support and resistance

On the daily chart, the price is correcting, approaching the resistance line of the ascending channel with dynamic boundaries of 1.3950–1.3680.

Technical indicators have reversed and keep a stable buy signal: the range of EMA fluctuations on the Alligator indicator is directed towards growth, and the AO histogram is forming new ascending bars, being above the transition level.

Support levels: 1.3790, 1.3690.

Resistance levels: 1.3840, 1.3950.

Trading tips

If the asset continues growing and the price consolidates above 1.3840, buy positions with the target of 1.3950 will be relevant. Stop-loss — 1.3790. Implementation time: 7 days and more.

If the asset continues declining and the price consolidates below 1.3790, short positions can be opened with the target at 1.3690. Stop-loss — 1.3850.