- The USD/CAD outlook shows renewed strength in the Canadian dollar.
- Former central banker Mark Carney took office as Canada’s new prime minister.
- Data on Friday revealed a sharp decline in US consumer confidence.
The USD/CAD outlook shows strength in the loonie after a former Bank of Canada policymaker took office as Canada’s new prime minister. At the same time, downbeat data and recession worries weighed on the US dollar, allowing the Canadian dollar to recover.
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On Friday, Mark Carney took office as Canada’s new prime minister. Experts believe the former central banker might have the right skills to steer Canada’s economy amid negative pressure from Trump’s tariffs and global trade wars. As a result, there was optimism, and demand for the loonie increased.
However, the outlook for the economy remains clouded with uncertainty. Trump gave Canada another month before implementing a 25% tariff on the country’s imports. If this happens, policymakers will have a difficult time trying to support economic growth.
On the other hand, several economic reports last week revealed softer-than-expected inflation in the US. As a result, Fed rate cut expectations increased. At the same time, traders were worried about an economic slowdown sparked by Trump’s tariffs. The ongoing trade wars have left US businesses vulnerable.
Furthermore, data on Friday revealed a sharp decline in US consumer confidence. This confirmed fears of an economic slowdown. At the same time, inflation expectations soared. Trump’s tariffs will increase costs and boost inflation. Therefore, the Fed will have to balance between growth and inflation.
USD/CAD key events today
- US core retail sales m/m
- US retail sales m/m
USD/CAD technical outlook: Bears set sights on range support
On the technical side, the USD/CAD price has broken below the 30-SMA, and the RSI is below 50, indicating a strong bearish bias. However, on a larger scale, the price is trading in a range between the 1.4301 support and the 1.4501 resistance level. Therefore, there is no clear direction until it either breaks above the resistance or below the support.
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At the moment, bears are targeting the range support. A break below this level will signal the likely start of a downtrend. Moreover, it will clear the path for the price to reach the 1.4150 support level.
On the other hand, if the support holds firm, the price will remain in consolidation, with bulls targeting the range resistance level.
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