- The likelihood of the Fed hiking in June has risen to nearly 30%.
- Flash US Services PMI Index climbed to 55.1, the highest reading since April 2022.
- There was a decline of 0.2% in Canada’s producer prices in April.
Tooday’s USD/CAD price analysis is bullish as the dollar strengthens on rate hike bets. US economic data has indicated a robust economy, and Federal Reserve officials have generally expressed hawkish views. As a result, the probability of a rate hike in June has risen to nearly 30%.
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On Tuesday, economic data provided further evidence of the resilience of the US services sector. According to a poll from S&P Global, the flash US Services PMI Index climbed to 55.1, marking the highest reading since April of the previous year.
On Tuesday, the Canadian dollar remained largely unchanged compared to the US dollar. It recovered from earlier losses as oil prices increased and the US dollar experienced overall gains.
Notably, Rahim Madhavji, president at Knightsbridge Foreign Exchange, mentioned in a note that the Canadian dollar had been defensive since Monday due to high demand for US dollars. Federal Reserve officials’ hawkish comments resulted in the US dollar reaching a two-month high against major currencies. Consequently, investors anticipate potential interest rate hikes.
Oil prices surged after the Saudi energy minister warned speculators, indicating the potential for additional OPEC+ production cuts.
In April, domestic data revealed a decline of 0.2% in Canada’s producer prices compared to March. This drop can be attributed to lower prices for refined petroleum energy products and softwood lumber.
USD/CAD key events today
The US will release its weekly crude oil inventories report, affecting the Canadian dollar. Furthermore, investors will pay attention to the FOMC meeting minutes that might give more clues about future Fed moves.
USD/CAD technical price analysis: Buyers to pounce 1.3550
USD/CAD has made a strong bullish candle on the 4-hour chart and is trading near the 1.3350 resistance level. This comes after the price respected the 30-SMA support, indicating it might be ready to trend.
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The RSI is nearing the overbought region, showing bulls are gathering momentum. However, bulls must break above the 1.3350 resistance level for this bullish move to continue. Otherwise, the price will fall back into the consolidation area.
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