Baxia Markets
April 25, 2024

USDCAD Under Pressure Amid Rate Cut Speculations and Upcoming US GDP Data

market analysis header image
The lower Canadian Retail Sales figures have fueled speculation that the Bank of Canada (BoC) might opt to reduce interest rates in June. This sentiment has been further accentuated by concerns over the health of the Canadian economy and its potential impact on the Canadian Dollar (CAD).

On Thursday, all eyes will be on the preliminary Gross Domestic Product Annualized (Q1) data for the United States (US). With expectations of a slowdown in the growth rate, these GDP figures will provide crucial insights into the strength of the US economy. This data release could also influence future actions by the Federal Reserve (Fed), adding another layer of complexity to the currency markets.USDCAD

Technical analysis on the 1-hour chart for USDCAD paints a bearish picture. Several key technical indicators point towards further downside potential. The EMA 50 is positioned below the EMA 200, suggesting a bearish trend. The MACD has submerged below the 0 line, while the RSI has entered the bearish zone by breaking below 40%. Additionally, prices are trading under the Ichimoku cloud, further confirming the bearish sentiment.

There's little sign for a reversal at the moment. However, a more definitive signal could emerge if the US GDP data comes in higher than the forecast. A breakout above the Ichimoku cloud or a crossover in the MACD and RSI could be potential bullish indicators to watch for.

Key level support to watch for USDCAD is at 1.3660, plotted by a red rectangle on the chart. If the GDP data comes in lower than the forecast, it may break this key support level and continue the bearish trend. On the other hand, if the GDP data surpasses expectations, it could mark the beginning of a bullish reversal for USDCAD.

Overall, USDCAD remains bearish in the short term. The upcoming US GDP data will be a crucial factor in determining the pair's direction. Traders and investors should remain vigilant and closely monitor these key economic releases for potential trading opportunities.

Key Takeaways:

  1. Lower Canadian Retail Sales fuel rate cut talks for BoC.
  2. US GDP data release to offer insights on Fed's future actions.
  3. USDCAD technicals show bearish signs with EMA, MACD, and RSI indicators.
  4. Key support level at 1.3660 could be tested post-GDP data.
  5. Upcoming economic releases to dictate short-term USDCAD movement.

Key Economic Releases to Watch Today


Forecast 2.5% vs Previous 3.4%

USD, Initial Jobless Claims

Forecast 214K vs Previous 212K




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