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USDCAD Trading in the Range of 1.3500–1.3250

2/14/2023 1:51 PM

During the morning trading, the quotes of the USD/CAD pair are slowly declining to the level of 1.3340.

Today at 15:30 (GMT+2), January data on the dynamics of consumer prices in the USA will be presented: in annual terms, the index may drop from 6.4% to the lowest value since the second half of 2021 at 6.2%, and the base indicator — from 5.7% to 5.5. Thus, the markets expect to receive evidence that inflation has overcome peak levels and is beginning to decline towards the regulator's goal of 2.0%, which means that the US Fed no longer needs to sharply tighten monetary policy. So, if the forecasts are implemented, we should expect a weakening of the US currency in the mid-term.

As for the Canadian economy, last Friday it showed strong data in the employment sector, the change of which in January amounted to 150.0K, which was 10 times higher than the preliminary estimates of experts, while the previous indicator was adjusted downward – from 112.0K to 69.2K. The unemployment rate in Canada remained unchanged at 5.0%, although analysts had forecast a slight increase of 0.1% to 5.1%.

Thus, the USD is under pressure ahead of the release of inflation data, and the Canadian currency is strengthening, reacting to positive statistics from the labor market, and against this background, the decline of the USD/CAD pair may continue with a target at 1.3250.

The long-term trend remains descending. The target of the decline is to test the level of 1.3250, if it is broken down, the movement will continue with a target at 1.2970. Otherwise, the asset quotes may correct to the area of 1.3500.

The mid-term trend is downward. At the moment, the price is trading in a correction, the target of which is to test the key resistance of the trend 1.3532–1.3509. If this zone is reached, it will be possible to consider selling the instrument with a target at the February minimum of 1.3265.

Resistance levels: 1.3500, 1.3670. | Support levels: 1.3250, 1.2970.

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