USDCAD could be one of the FX pairs that may experience high volatility today. This is because the Canadian CPI report for May is scheduled to be released at 1.30pm BST, followed by the US Conference Board Consumer Confidence Index for June.
The Canadian report is expected to show a slight deceleration in headline CPI inflation from 2.7% in April to 2.6% year-on-year in May, as well as a deceleration in core CPI inflation from 1.6% to 1.4% year-on-year. The Conference Board index is expected to worsen from 102.0 in May to 100.2 in June. While US data is likely to have only a short-term impact on the USD, the Canadian inflation report will be watched more closely as the release confirming the expected slowdown or showing a larger-than-expected slowdown in price growth could encourage the Bank of Canada to proceed with more measures. rate cuts, after a 25 basis point reduction at the last meeting.
Taking a look at the USDCAD chart on the H4 timeframe, we can see that the pair has been trading sideways since mid-April. The pair recently retreated from the 1.3780 area and is now testing the 1.3640 support zone, marked by the previous price reaction and an uptrend line. A dovish surprise in Canadian data could help the pair regain ground. In such a scenario, the first short-term resistance level can be found in the 1.3680 area, marked by the 200-period moving average (purple line) and previous price reactions.
Source: xStation5
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