USD/CAD Attempts Breakout As DXY Index Extends Gains
USD/CAD exchange rate is currently testing a key resistance level of 1.33. The currency pair is experiencing a bullish movement in its price which can be attributed to upside moves made by DXY Index. In the last FOMC meeting, the interest rate in the US was raised by another 25 basis points. This strengthened the dollar against the rest of the six global currencies.
Consequently, USDCAD is currently trading at 1.33095 after a 0.25% increase on Wednesday. If DXY continues to show signs of bullish momentum, the US dollar to Canadian dollar exchange rate will most likely see new highs as well.
More Rate Hikes Are Expected By Bank Of Canada
The Bank of Canada is expected to increase the rate by another 25bps, as it aims to bring the inflation rate to 2%. It is important to note that the core inflation rate is still 3.7%. However, the June CPI data indicated that consumer prices in Canada increased by only 2.8%, which is the least increase in over two years. Despite this, CAD saw a decline in its value against USD and may continue to do so if the dollar strength index keeps surging.
On Tuesday, the rating agency Fitch downgraded the US’s Credit rating from AAA to AA+, which came as a surprise to a lot of investors and analysts. This had little effect on the Dollar Strength Index, as it currently stands at 102.240, up by 0.28% from the previous session.
USD/CAD Forecast August 2023
As I have mentioned earlier, USD/CAD exchange rate is retesting a significant resistance level on its chart. This perfectly aligns with the downward trend line as well. If the exchange rate breaks this resistance level and reclaims the July high of 1.338, 1.368 could be the next target for bulls.
USD/CAD forecast will remain bullish as long as the US dollar continues to strengthen itself against the rest of the global currencies. Another rate hike by the Bank of Canada could act as a tailwind for the Canadian dollar, but the next meeting is still more than a month away.
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