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USD/CAD Uptrend Continues, Eyes on PCE Data

The Canadian Dollar (CAD) is experiencing a second day of modest gains against the US Dollar on Tuesday. Pre-Easter trading volumes remain light, and a slight return of risk appetite is keeping the US Dollar in check. The market continues to digest last week’s dovish Federal Reserve policy statement, with Friday’s US Personal Consumption Expenditures (PCE) Price Index data now a central focus.

Recent US macroeconomic data has presented a mixed picture. While Durable Goods Orders surpassed expectations in February, a surprise dip in the Conference Board’s Consumer Confidence Index tempered optimism.

Conflicting signals emerged from Fed speakers on Monday. Chicago Fed President Goldsbee suggested three potential rate cuts, while more hawkish sentiments came from Raphael Bostic, who indicated a preference for just one cut in 2024. Fed Governor Lisa Cook maintained a stance favoring a cautious approach. Despite these variations, the USD/CAD pair’s broader technical outlook remains bullish, with the CAD’s current uptick likely a temporary correction.

After failing to break above trendline resistance at 1.3615, the pair continues to trade within a rising channel. Currently, it holds above the 38.2% Fibonacci retracement of the prior upward move at 1.3575. Friday’s inflation data will provide further clues to the US Dollar’s near-term trajectory. Key support levels exist at 1.3555 and the 1.3440-1.3460 zone. Bulls will target resistance at 1.3610 and potentially the 1.3700 mark.