The US Dollar loses strength, causing a significant drop in the USDCAD exchange rate to nearly 1.3450.

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• USD/CAD drops sharply to near 1.3450 as US Dollar loses resilience.

The pair currently trades last at 1.34602.

The previous day high was 1.348 while the previous day low was 1.3437. The daily 38.2% Fib levels comes at 1.3463, expected to provide resistance. Similarly, the daily 61.8% fib level is at 1.3453, expected to provide support.

The USD/CAD pair witnesses selling pressure after sensing immense selling interest near a two-month high of around 1.3500 in the early New York session. The Loonie asset dropped amid a sell-off in the US Dollar despite upbeat United States Retail Sales and higher-than-expected Canadian inflation data for July.

S&P500 opens on a negative note as robust consumer spending momentum elevates consumer inflation expectations. The US Dollar Index tests territory below the crucial support of 103.00.

US Census Bureau reported that consumer spending in July expanded at a higher momentum. The economic data rose by 0.7% vs. expectations of 0.4% and the former release of 0.2%. It seems that higher disposable income due to sustained wage growth allows individuals to spend heavily. Retail Sales excluding automobiles rose by 1.0%, indicating robust demand for durables and quick consumables.

A moderate increase in inflation and resilient consumer spending would force the Federal Reserve (Fed) to keep interest rates higher for a longer period. Going forward, investors will focus on the Federal Open Market Committee (FOMC) minutes for July’s monetary policy, which will be released on Wednesday.

Meanwhile, the Canadian Dollar strengthens as the Consumer Price Index (CPI) for July expanded strongly. Headline CPI grew at a 0.6% pace, outperforming surprisingly higher estimates of 0.3%. Core inflation that excludes volatile oil and food prices expanded strongly by 0.5%. Annual headline inflation accelerated to 3.3% while core CPI remained stable at 3.2%. Hotter-than-expected Canadian inflation would discomfort Bank of Canada (BoC) policymakers and force them to deliver hawkish commentary.

Technical Levels: Supports and Resistances

USDCAD currently trading at 1.3468 at the time of writing. Pair opened at 1.3461 and is trading with a change of 0.05 % .

The pair remains strongly bullish on the daily timeframe. It trades above its 20 SMA @ 1.3293, 50 SMA 1.3269, 100 SMA @ 1.3386 and 200 SMA @ 1.345.

The previous day high was 1.348 while the previous day low was 1.3437. The daily 38.2% Fib levels comes at 1.3463, expected to provide resistance. Similarly, the daily 61.8% fib level is at 1.3453, expected to provide support.

Note the levels of interest below:

• Pivot support is noted at 1.3438, 1.3416, 1.3395
• Pivot resistance is noted at 1.3482, 1.3502, 1.3525

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