Bulls vs. Bears! USDCAD Volatility Continues

Summary:

The Federal Reserve is set to announce its interest rate decision in the early hours of July 30 (Beijing time). The market is pricing in a roughly 38% probability of a 25-basis-point rate hike at this meeting, a sharp jump from 13% a week ago.

BUY USDCAD

EXP

TRADING

1.40865

Entry Price

1.45000

1.38000

1.41032 +0.00124 +0.09%

0.0

Pips

Flat

1.38000

Exit Price

1.40865

Entry Price

1.45000

Fundamentals

Canadian retail sales rose for the fifth consecutive month in May, indicating that consumers remain resilient despite rising energy prices. According to Statistics Canada, total retail sales rose 1% month-over-month to C$73.7 billion, while sales volume increased by 0.3%. Gas stations and fuel retailers posted the largest increase in value terms, up 3.1%, though sales volume actually fell by 2.7%. Core retail sales, excluding gasoline and motor vehicles, rose 0.9%, driven primarily by general merchandise retailers, whose sales increased by 1%—marking the first growth in three months.

The Federal Reserve is set to announce its interest rate decision in the early hours of July 30 Beijing time. According to CME Federal Funds futures data, the market is pricing in a roughly 38% probability of a 25-basis-point rate hike at this meeting, a sharp jump from 13% a week ago. However, a survey showed that all respondents expect the Federal Reserve to keep its benchmark interest rate unchanged in the 3.50% to 3.75% range. Among investment banks, Morgan Stanley expects the Federal Reserve to hold rates steady in July and possibly keep them unchanged for the rest of the year; French investment bank Natixis also expects rates to remain unchanged in July and likely to stay steady through 2026.

Technical Analysis

Looking at the USD/CAD on the 4-hour chart, the Bollinger Bands are narrowing, and the moving averages are flattening out, suggesting a potential rebound to around 1.42. The RSI stands at 50, indicating the market has entered a wait-and-see zone. On the daily chart, the Bollinger Bands are narrowing, moving averages are flattening, and following a MACD death cross, the fast and slow lines have pulled back to near the 0-line, suggesting a potential trend reversal at any moment. With the RSI at 49, market participants are largely adopting a wait-and-see approach. Strategically, look to buy on dips.

Bulls vs. Bears! USDCAD Volatility Continues_1

Bulls vs. Bears! USDCAD Volatility Continues_2

Trading Recommendation

Trading Direction: Buy

Entry Price: 1.408

Target Price: 1.45

Stop-Loss Price: 1.38

Support Levels: 1.39, 1.38, 1.37

Resistance Levels: 1.42, 1.45, 1.48

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Bulls vs. Bears! USDCAD Volatility Continues

Risk Disclosure