Current trend

Against the stabilization of the US currency quotes, the USD/CAD pair is correcting around 1.3247.

The Canadian dollar may be supported by data on the gross domestic product (GDP), due today at 14:30 (GMT 2): analysts expect an increase in value by 0.2% after zero dynamics in April.

Earlier, the inflation report was presented, which is likely to become decisive in the decisions of the Bank of Canada on monetary policy: the consumer price index in May slowed down from 4.4% to 3.4 YoY, the lowest level since June 2021, coincided with analysts’ forecasts, and from 0.7% to 0.4% MoM, below the expected 0.5%. The core rate for the same period adjusted from 4.1% to 3.7% YoY and from 0.5% to 0.4% MoM. Thus, inflation is slowing down, so the monetary authorities may keep the interest rate at 4.75% at the next meeting.

The US dollar is strengthening, trading at 102.900 in the USD Index. Investors reacted positively to the Q1 gross domestic product (GDP) growth by 2.0%, above the preliminary estimate of 1.4%: despite the decline from 2.6% earlier, the chances of longer retention in the positive zone increased. Initial jobless claims were positive, too, and amounted to 239.0K applications against 265.0K a week earlier.

Support and resistance

On the daily chart, the trading instrument is falling within the global Triangle pattern, returning to the passed support line at 1.3280 for backtesting.

Technical indicators maintain a stable sell signal: the range of EMA fluctuations on the Alligator indicator remains directed downwards, and the AO histogram forms corrective bars below the transition level.

Resistance levels: 1.3335, 1.3500.

Support levels: 1.3140, 1.2980.

Trading tips

Short positions may be opened after the price drops and consolidates below 1.3140 with the target at 1.2980. Stop loss – 1.3200. Implementation period: 7 days or more.

Long positions may be opened after a reversal, growth, and consolidation of the price above 1.3335 with the target at 1.3500. Stop loss – 1.3250.