The USD/CAD price formed a hammer pattern last week as investors focused on the soaring Canada inflation data. As a result, the USD to CAD exchange rate is trading at 1.2935, slightly above last week’s low of 1.2818, as the focus shifts to key events from the US.
Fed decision ahead
The USD/CAD price rose slightly ahead of the upcoming interest rate decision by the Federal Reserve that is scheduled for Wednesday this week. The FOMC committee will conclude the meeting on Wednesday and deliver another giant rate hike. Analysts expect it will increase by 0.75% for the second straight month. It has already hiked interest rates by about 150 basis points this year.
The upcoming US consumer confidence and GDP numbers will be the other important catalysts for the USDCAD price. Economists expect consumer confidence to decline slower in July as gas prices retreated. This is important since consumer spending is the most important part of the American economy.
The USD/CAD price will also react to the latest American GDP numbers that are scheduled for Thursday this week. Analysts expect the economy to grow at a significantly slower pace considering that inflation remained elevated in Q2.
USD/CAD forecast
Turning to the four-hour chart, we see that the USDCAD price formed a hammer pattern last week. In price action analysis, hammer is usually a bullish sign. The pair has also retested the important resistance level at 1.2935, which was the lowest level on July 13th and 8th.
The USD/CAD price has moved between the 25-period and 50-period moving averages, while the Relative Strength Index has moved to the neutral level. Therefore, it will likely continue rising as investors wait for the upcoming FOMC decision. According to InvestingCube’s real-time S&R indicator, the pair will likely rise to 1.3228, followed by 1.33. The stop-loss for this trade will be at 1.2812 and 1.2700.
