**USD/CAD Forecast, Price Analysis, and Market Outlook – July 2024**
*Based on insights from FXStreet, enhanced with broader analysis and updated sources*
The USD/CAD currency pair has seen fluctuating trends in recent months amid a complex global macroeconomic backdrop. As of mid-July 2024, investor sentiment surrounding USD/CAD is largely influenced by diverging central bank policies, evolving energy markets, and varying macroeconomic indicators from both Canada and the United States.
This article offers a comprehensive analysis of the USD/CAD forex pair, including:
– Recent price trends
– Technical and fundamental indicators
– Key economic drivers from both countries
– Forecasts through Q3 and Q4 2024
**Recap and Current Market Position**
As of July 18, 2024, USD/CAD is trading within the 1.3600 to 1.3750 range. The pair saw a sharp rally in early July due to better-than-expected U.S. CPI figures, a slight uptick in Treasury yields, and a drop in crude oil prices that weighed down the Canadian dollar.
**Key Short-Term Factors Driving USD/CAD**
Several key elements are currently influencing USD/CAD exchange rate movements:
– **U.S. Economic Strength**: The latest Consumer Price Index (CPI) reading for June showed inflation moderating, though sticky core inflation keeps Federal Reserve policy expectations cautious. U.S. employment data also remains relatively strong.
– **Federal Reserve Policy Outlook**: Despite inflation easing, Fed officials have kept a restrictive tone. While market participants widely expect one rate cut before the end of 2024, it continues to depend heavily on incoming inflation and labor data.
– **Bank of Canada (BoC) Cuts**: On July 17, the BoC conducted its second rate cut of the year, trimming the overnight target rate by 25 basis points to 4.50 percent. The move was largely priced in, but it adds bearish pressure to the Canadian dollar.
– **Crude Oil Prices**: As a commodity-linked currency, the Canadian dollar is impacted by oil price movement. Crude oil has retreated from its recent highs near $83 WTI as concerns about global supply eased and Chinese demand wavered.
– **U.S. Treasury Yields**: Rising yields, especially at the 10-year benchmark, have been supportive of the U.S. dollar. Investors seeking safety and yield have favored the greenback over commodity currencies like the loonie.
**Technical Analysis of USD/CAD**
From a technical viewpoint, USD/CAD shows mixed signals on various timeframes:
– **Daily Chart**: The pair remains in a mild uptrend and trades above both its 50-day and 200-day moving averages. This signals strength in broader momentum.
– **Support Zones**:
– 1.3600: Psychological and technical support with historical significance
– 1.3550: Next level of support, close to the 50-day moving average
– **Resistance Levels**:
– 1.3730–1.3750: Key resistance zone that has capped upside in recent weeks
– 1.3850: A breach here could target 1.3900 and beyond
– **Technical Indicators**:
– RSI (Relative Strength Index) near 60 suggests bullish momentum but is approaching overbought levels
– MACD remains in positive territory, highlighting potential for further gains
**Fundamental Overview: U.S. Economy**
The U.S. economy continues to show resilience. Key economic data and projections indicate:
– **GDP Growth**: After a strong Q1 showing of 2.3 percent annualized growth, Q2 projections hover around 2.0 percent, according to the Atlanta Fed’s GDPNow tracker.
– **Inflation Trends**:
– Headline CPI for June rose 3.1 percent Yo
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