#USDCAD @ 1.37866 has reclaimed the immediate hurdle of 1.3800 after a knee-jerk reaction. (Pivot Orderbook analysis)

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• USD/CAD has reclaimed the immediate hurdle of 1.3800 after a knee-jerk reaction.
• Market mood is getting mixed which advocates volatility ahead.
• Oil prices drop after the IMF cuts 2023 GDP projections.

The pair currently trades last at 1.37866.

The previous day high was 1.3855 while the previous day low was 1.3715. The daily 38.2% Fib levels comes at 1.3802, expected to provide resistance. Similarly, the daily 61.8% fib level is at 1.3768, expected to provide support.

The USD/CAD pair has recovered sharply after a knee-jerk reaction to near 1.3783 in the early European session. The asset is aiming to knock the day’s high at around 1.3830 as the overall risk profile is extremely negative ahead of the US inflation data. The 10-year US Treasury yields have recovered some of their losses after dropping to near 3.9%.

The mighty US dollar index (DXY) has also picked bids after dropping to near 113.00, however, confidence in the rebound move is absent. It would be worth watching whether the asset will recapture its fresh weekly highs at 113.60.

This week, the mega event will be the US Consumer Price Index (CPI) data, which will release on Thursday. As per the preliminary estimates, headline inflation will drop to 8.1% due to weak gasoline prices. While, the core CPI that doesn’t inculcate oil and food prices for calculation will release at 6.5%, higher than the prior print of 6.3%.

But before that, the release of the Federal Reserve (Fed) minutes will be keenly watched. The minutes will also provide viewpoints of all Fed policymakers toward interest rate targets for bringing price stability.

On the oil front, oil prices have dropped sharply to near $87.00 after the International Monetary Fund (IMF) cuts global growth projections. The institution has trimmed its 2023 global Gross Domestic Product (GDP) forecast to 2.7%, 20 basis points (bps) lower than expectations made in July, keeping the 2022 projections unchanged at 3.2%.

It is worth noting that Canada is the largest exporter of oil to the US and weak oil prices will weaken Canada’s fiscal balance sheet.

Technical Levels: Supports and Resistances

USDCAD currently trading at 1.3814 at the time of writing. Pair opened at 1.3798 and is trading with a change of 0.12 % .

The pair remains strongly bullish on the daily timeframe. It trades above its 20 SMA @ 1.3561, 50 SMA 1.3214, 100 SMA @ 1.3036 and 200 SMA @ 1.2865.

The previous day high was 1.3855 while the previous day low was 1.3715. The daily 38.2% Fib levels comes at 1.3802, expected to provide resistance. Similarly, the daily 61.8% fib level is at 1.3768, expected to provide support.

Note the levels of interest below:

• Pivot support is noted at 1.3723, 1.3648, 1.3582
• Pivot resistance is noted at 1.3864, 1.393, 1.4005

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