- USD/CAD trades nearly 1.3575 because markets spend mixed US retail sales before the medium Fed decision.
- Increased oil prices and geopolitical risks in the Middle East reduce losses for the Canadian dollar.
- USD/CAD remains in the descending wedge, while the relative force index indicates a bear -dynamics pause.
The Canadian dollar (CAD) holds its land against the US dollar (USD) on Tuesday, with USD/CAD moving to the side near 1.3575.
Mixed signals from the latest data on retail sales in the US and tension escalation in the Middle East continues to keep traders cautious because political meetings are being built.
The couple are trying to find the direction after the minimum on Monday, focusing on the upcoming decision of the Federal Committee on the Open Market (FOMC) and any new Gulf subtitles.
While oil prices remain increased, CAD support through its commodity connection, recent American data and monetary policy signals remain in front and in the middle.
Retail sales provide mixed signals on the trends of consumer expenditure
The release of retail sales in the US on Tuesday provided a mixed picture. The headlines decreased by 0.9%in May, which lacked the market expectations by 0.7%decrease and marking the steepest decrease since the beginning of 2024. Sales, except for cars, also fell by 0.3%, indicating a wide softness of consumer activity.
The control group, which gets rid of volatile categories and kings directly into the calculation of the gross domestic product (GDP), increased by 0.4%, indicating strong bounces from April -0.1% and the sign that basic consumption remains resistant.
For Federal reserveThe message represents a mixed picture. The heading number reinforces the Case for Guidance rates Stable and possibly alleviating later in the year. However, the inspection group suggests that the economy is still resistant and reduces the urgency for rates.
From a broader point of view, the conflict of Israel and Iran intensifies and threatens the safety of the Hormuz Strait-Critical suffering point for the global oil offer.
Because CAD is a commodity currency, increased oil prices can help reduce the disadvantage for Looon.
In the near future, traders will carefully monitor oil price fluctuations associated with the development of the Middle East and signal signals from the Fed in the center. These intersecting forces are likely to form the USD/CAD path to the second half of the week.
USD/CAD Technical Level
USD/CAD remains under permanent sales pressure, traded near $ 1,3580 and holds just above the key support of the trend.
Prices continued to respect the boundaries of the descending channel, with 10 -day (1,3644), 20 -day (1,3713) and 50 -day (1.3819) by simple moving averages (SMA) above the current level.
A few briefly tested the lower limit of the channel near 1.3540, but still has to break under it.
Near this level, the door could open the door towards November 2024 at a minimum of 1.3419. Meanwhile, the relative force index (RSI) is at 29 years and shows above, indicating that bull momentum can lose a couple.
If the US dollar is strengthened, it could risk short -term consolidation or technical bounce against resistance to 1.3640–1.3710 in the near future.
Daily UsD/CAD Graph
US DOLLAR FAQS
The US dollar (USD) is the official currency of the United States of America and “de facto” currency of a large number of other countries where it is in circulation beside local notes. It is the most traded currency in the world, which represents more than 88% of all global foreign exchange fluctuations, or on average $ 6.6 trillion in transactions daily, according to 2022. For most of its history, the US dollar was supported by gold until Bretton Woods in 1971, when the gold standard disappeared.
The most important single factor that affects the value of the US dollar is the monetary policy that is formed by a federal reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and support full job. Its primary tool to achieve these two goals is to adjust the interest rates. When prices are rising too fast and inflation is above 2% Fed’s goal, the Fed will increase rates, which helps USD. When inflation falls below 2% or the unemployment rate is too high, the Fed can reduce interest rates that weigh green.
In extreme situations, the federal reserve system can also print more dollars and enable quantitative release (QE). QE is a process by which the Fed significantly increases the flow of the loan in the stuck financial system. This is a non -standard political measure used when the credit has dried up because banks do not borrow each other (for fear of extending the default). This is the last possibility where the interest rates are unlikely to achieve the necessary result. The Fed’s weapon was an election in the fight against the credit crisis that occurred during the major financial crisis in 2008. This includes the printing of more dollars and their use to buy US government bonds mainly from financial institutions. QE usually leads to a weaker US dollar.
Quantitative tightening (QT) is a reverse process where the federal reserve system stops buying bonds from financial institutions and does not represent the principal of the bonds it brings in new purchases. It is usually positive for the US dollar.
