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Persistent Bearish Sentiment Dominates
Economic
Forex
Summary:
The US dollar has been negatively impacted by soft US inflation data and rising expectations for a Federal Reserve rate cut in September. As USDCAD continues to decline within a descending channel, persistent bearish sentiment has taken the lead.
Sell
TradingUSDCAD
EXP
1.36226
Entry Price
1.34700
TP
1.36950
SL
1.36034 +0.00235 +0.17%
0
Point
Flat
1.34700
TP
CLOSING
1.36226
Entry Price
1.36950
SL
Fundamentals
During the European session on Thursday, USDCAD resumed its downward trajectory within the descending channel. Soft US inflation data and increasing expectations for a Federal Reserve rate cut in September have weakened USDCAD.
The US Consumer Price Index rose by 0.1% in May, falling short of the expected 0.2% and marking the fourth consecutive month below the market's average forecast. The overall index grew by 2.4% YoY, while the core index (excluding food and energy) increased by 2.8%. The current price growth rate of the core index remained unchanged for the third consecutive month, at the lowest level in nearly four years.
Tariff disputes have not yet led to a significant spike in inflation, as new-priced goods have not yet reached consumers. However, it is also worth noting that sellers are not as eager to pass on costs in advance as in many other countries. During the first trade war in 2018, we also observed a slowdown in price increases with a minimal impact on overall inflation.
In response to this news, the US Dollar Index initially fell by 0.5% in the first few minutes but subsequently rebounded by more than half. After overnight digestion, the market returned to a downward trend. Overall, this is negative news for the US dollar, reinforcing the Federal Reserve's dovish stance.
Additionally, a trade agreement between the US and Canada is likely to be finalized during the G7 summit on June 15, which appears to be strengthening the Canadian dollar.
Technical Analysis
During the European session on Thursday, USDCAD completely relinquished the previous trading day's gains, trading around 1.3630. Technical analysis on the daily chart shows that as the asset continues to decline within the descending channel, persistent bearish sentiment has taken the lead.
A decisive break below 1.3603 would pave the way for a 100% Fibonacci retracement to 1.3349. Moreover, the current decline remains part of the head-and-shoulders top pattern that began in February. According to this pattern, a drop to 1.3470 by the bears would provide a decent adjustment.
Trading Recommendations
Trading Direction: Sell
Entry Price: 1.3676
Target Price: 1.3470
Stop Loss: 1.3695
Deadline: June 27, 2025, 23:55:00
Support: 1.3593/1.3540/1.3495
Resistance: 1.3675/1.3691/1.3702
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