Inflation Surges! USDCAD Marches Steadily Upward

Summary:

Investors are keeping a close eye on the Canadian Consumer Price Index figures for April, due to be released on Tuesday and Wednesday respectively, as well as the minutes of the Federal Open Market Committee’s April policy meeting.

BUY USDCAD

EXP

TRADING

1.37449

Entry Price

1.41000

1.35000

1.37453 +0.00064 +0.05%

0.0

Pips

Flat

1.35000

Exit Price

1.37449

Entry Price

1.41000

Fundamentals

The Canadian property market was once gripped by concerns over the so-called ‘mortgage renewal cliff’. The core logic at the time was that a large number of mortgages issued during the period of low interest rates would mature around 2025–2026, and if interest rates remained high, households’ repayment pressures could rise significantly. However, the actual situation has been far milder than anticipated. Interest rates began to fall in mid-2024, household incomes grew, banks offered a degree of repayment extensions and breathing space, and the accumulated home equity from previous house price rises collectively absorbed the shock. As a result, default rates did not rise significantly, and the property market has gradually stabilised following the adjustments of 2022–2023.

US monetary policy is entering a period of greater uncertainty. With Kevin Warsh set to take over as Chair of the Federal Reserve, there may be a shift in policy style, but the constraints remain: inflation is still above the 2% target, energy and tariff factors continue to exert pressure, and whilst the labour market is robust, it is not without its concerns. This means that the Federal Reserve is unlikely to simply shift towards easing in the short term, and may even reconsider raising interest rates should the need arise.

Technical Analysis

Looking at the USD/CAD on the four-hour chart, the Bollinger Bands are widening upwards and the moving averages are diverging upwards, indicating that the overall bullish trend remains intact. The RSI stands at 58, indicating that market sentiment is predominantly bullish. On the daily chart, the Bollinger Bands are narrowing, moving averages are flattening, and following a bullish crossover on the MACD, the fast and slow lines are retracing towards the 0-line; prices are likely to rebound towards the 200-day EMA. The RSI stands at 57, reflecting a generally optimistic market sentiment. The recommended strategy is to buy on dips.

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Trading Recommendation

Trading Direction: Buy

Entry Price: 1.374

Target Price: 1.41

Stop-loss Price: 1.35

Support Levels: 1.35, 1.325, 1.28

Resistance Levels: 1.4, 1.41, 1.42

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Inflation Surges! USDCAD Marches Steadily Upward

Risk Disclosure