**USD/CAD Weekly Outlook: Persistent Strength in USD Amid Mixed Fundamentals**
*Adapted and Expanded from ActionForex’s Analysis. Original Author Credit: ActionForex.com*
The USD/CAD pair continues to present traders with a dynamic technical and fundamental landscape. Following the developments in both the U.S. and Canadian economies, as well as global macroeconomic events, the pair has settled around the 1.3700 region. Investors are looking for clues on the next big move amid evolving central bank policies and commodity price fluctuations.
This article reviews the current technical structure of USD/CAD, assesses recent price action, and considers both U.S. and Canadian economic developments. It also takes into account expectations around central bank policies, particularly those of the Federal Reserve and the Bank of Canada (BoC).
## Overview of Recent Price Action
– USD/CAD had a moderate recovery during the week ending April 26, supported by broad U.S. dollar strength following upbeat economic data.
– The Canadian dollar remained under some pressure despite steady oil prices, which traditionally bolster CAD.
– The pair closed the week regaining a key level near 1.3700 after retreating from a high near 1.3845, indicating that buyers are still active at higher levels.
## Weekly Performance Summary
– The weekly high was set close to the 1.3845 threshold before sellers stepped in.
– The weekly low remained firmly above 1.3600 support level.
– Price action continues to respect an upside bias in the broader trend.
## Technical Outlook
The technical setup on the daily and weekly charts points toward a continuation of the bullish trend, although with potential consolidation in the short term.
### Daily Chart Observations:
– The near-term bias remains neutral to mildly bullish as long as support at 1.3604 holds.
– Resistance is noted at 1.3843, the April high. A break above this level would confirm a continuation of the rally from 1.3176.
– The 55-day Exponential Moving Average (EMA) currently lies beneath the price and is sloping upward, reinforcing short-term bullish momentum.
### Weekly Chart Analysis:
– Momentum indicators like the Relative Strength Index (RSI) remain supportive of further upside potential, but overbought conditions are not yet evident, indicating room to run higher.
– A firm break above 1.3843 could open the path toward the next significant resistance level at 1.3897, the October 2023 high.
– Continued rejection near this level, however, would signal consolidation or possible retracement within the larger uptrend.
### Key Technical Levels:
– Resistance:
– 1.3843: Local spike high
– 1.3897: Long-term resistance from October 2023
– 1.3977: High from March 2023
– Support:
– 1.3604: Minor support and near-term breakout level
– 1.3523: Mid-range support (April lows)
– 1.3370: Rising trendline from the 2023 low
## Fundamental Analysis
### United States Outlook:
The U.S. economy has shown persistent strength in recent months:
– Q1 2024 GDP came in below expectations at 1.6%. However, the underlying inflation figures (core PCE) remained elevated at 3.7%, keeping Fed officials on alert.
– U.S. consumer spending remains resilient, though marginally slowing, showing that inflationary pressures are still a concern.
– Labor market strength persists, with low unemployment and robust non-farm payroll prints.
– The Federal Reserve is expected to keep rates higher for longer. Market expectations now suggest the Fed may delay any rate cuts until late 2024, depending on data.
These developments have kept demand for the U.S. dollar buoyant, particularly as inflation remains sticky and real yields stay elevated.
### Canada Outlook:
The Canadian economy
Read more on USD/CAD trading.