USD/CAD slipped to 1.3565 after Canada’s Consumer Price Index (CPI) showed inflation cooling faster than anticipated, fueling speculation of a potential early rate cut by the Bank of Canada (BoC).
Key Factors:
- Canadian CPI Surprise: Unexpectedly soft inflation data increases the likelihood of a BoC rate cut in June.
- US Housing Data: Positive figures suggest resilience in the US housing sector.
- Fed Decision Looms: Market focus shifts to Wednesday’s Federal Reserve (Fed) meeting, with traders awaiting updated projections for US interest rates.
Technical Outlook:
- Inverted Hammer Formation: Failure to hold above 1.3600 creates a bearish ‘inverted hammer’ candlestick pattern, suggesting a potential downside.
- Key Support Levels: The 100-day MA (1.3520), followed by the 200/50-day MA confluence (1.3481/87), offer potential support.
- Bullish Case: A reclaiming of 1.3600 could lead to a retest of the November 24 high at 1.3711.
