- The USD/CAD forecast indicates a declining US economy.
- Private employment in the US was lower than expected in March.
- The US GDP report revealed that the economy contracted by 0.3%.
The USD/CAD forecast indicates a declining US economy, putting pressure on the Federal Reserve to lower interest rates in June. At the same time, Canada’s economy unexpectedly contracted, increasing the chances that the BoC will resume its easing cycle.
If you are interested in automated forex trading, check our detailed guide-
Data on Wednesday revealed that private employment in the US was lower than expected. The economy added 62,000 jobs compared to forecasts of 114,000. The decline pointed to weaker demand in the labor market in April, likely due to Trump’s tariffs.
Meanwhile, the Advance US GDP report revealed that the economy contracted by 0.3%. Economists had expected a 0.3% expansion. However, the decline was not as big as most experts had feared. Some major banks had predicted an over 1% contraction in the economy. Consequently, the decline in the dollar was limited.
A separate report showed the core PCE was unchanged. Meanwhile, economists had expected a 0.1% increase. The downbeat data, combined with softer-than-expected inflation, increased expectations for a Fed rate cut in June.
On the other hand, data from Canada revealed that the economy contracted by 0.2% compared to expectations of no change. This might also pressure the Bank of Canada to return to rate cuts after pausing at the last meeting.
USD/CAD key events today
- US unemployment claims
- ISM manufacturing PMI
USD/CAD technical forecast: Bears losing momentum
On the technical side, the USD/CAD price is caught in a sideways move near the 1.3800 support level. Currently, the price trades below the 30-SMA, indicating that bears are stronger. At the same time, the RSI is in bearish territory below 50.
If you are interested in guaranteed stop-loss forex brokers, check our detailed guide-
Therefore, bears might try to break below and detach from the 1.3800 key level. However, bearish momentum has faded since the downtrend reached the current support. The price started chopping through the 30-SMA with no clear direction. At the same time, the RSI made a bullish divergence, suggesting weakness in the decline.
The divergence might allow bulls to take charge by breaking above the SMA and retesting the 1.4050 key level. Meanwhile, if bears regain momentum, USD/CAD will continue its downtrend.
Looking to trade forex now? Invest at eToro!
67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
