#USDCAD @ 1.37083 has slipped to near 1.3700 as investors have shrugged off fears of a consecutive 25 bps Fed rate hike. (Pivot Orderbook analysis)

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• USD/CAD has slipped to near 1.3700 as investors have shrugged off fears of a consecutive 25 bps Fed rate hike.
• Tighter credit, economic contraction, and falling inflation could lead to rate cuts by the Fed this year.
• Declining Canada’s inflation indicates that the BoC could continue its steady stance on interest rates.

The pair currently trades last at 1.37083.

The previous day high was 1.3738 while the previous day low was 1.3644. The daily 38.2% Fib levels comes at 1.3702, expected to provide support. Similarly, the daily 61.8% fib level is at 1.368, expected to provide support.

The USD/CAD pair is showing a corrective move after failing to extend its recovery above 1.3740 in the Asian session. On Monday, the Loonie asset showed a solid recovery from 1.3660 after a decline in Canada’s inflation data. Declining Canada’s Consumer Price Index (CPI) data confirmed that the Bank of Canada (BoC) could continue with its unchanged policy stance.

BoC Governor Tiff Macklem is keeping its policy stance steady as he believes that the monetary policy is restrictive enough to achieve price stability. However, BoC Macklem has remained doors open for further hikes if the roadmap of bringing down inflation goes south.

Statistics Canada reported that monthly inflation has accelerated by 0.4%, lower than the consensus of 0.6% and the former release of 0.5%. The headline CPI softened to 5.2% vs. the consensus of 5.4% and the prior release of 5.9%. Apart from them, annual core CPI that doesn’t inculcate oil and food prices dropped to 4.7% from the previous figure of 5.0% but remained higher than the estimates of 4.6%. Overall, the decline in inflation was quite impressive for the BoC, which has already pushed interest rates to 4.5%.

Meanwhile, S&P500 futures are showing a subdued performance after two-day of bulk buying. Investors’ risk appetite is extremely strong as the odds are favoring a consecutive 25 bps rate hike by the Federal Reserve (Fed). The US Dollar Index (DXY) is struggling in maintaining its feet above 103.20 as fears of banking sector turmoil are not faded yet. Also, analysts at UBS are of the view that tighter credit, economic contraction, and falling inflation could lead to rate cuts by the Fed this year.

Technical Levels: Supports and Resistances

USDCAD currently trading at 1.3711 at the time of writing. Pair opened at 1.3712 and is trading with a change of -0.01 % .

The pair remains strongly bullish on the daily timeframe. It trades above its 20 SMA @ 1.3677, 50 SMA 1.3509, 100 SMA @ 1.3511 and 200 SMA @ 1.3348.

The previous day high was 1.3738 while the previous day low was 1.3644. The daily 38.2% Fib levels comes at 1.3702, expected to provide support. Similarly, the daily 61.8% fib level is at 1.368, expected to provide support.

Note the levels of interest below:

• Pivot support is noted at 1.3659, 1.3605, 1.3566
• Pivot resistance is noted at 1.3752, 1.3791, 1.3845

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