USD/CAD Weekly Forecast: Loonie Rises as US Dollar Slips

• Minutes from Wednesday’s FOMC meeting revealed that policymakers are poised to cut rates in September.

• US business activity fell in August.

• Powell’s speech confirmed a September rate cut and sent the dollar sinking.

The weekly USD/CAD forecast suggests a bearish trend, with the Canadian dollar gaining as the US dollar weakens after Powell’s speech.

USD/CAD Ups and Downs

The USD/CAD pair had a bearish week, with most of the movement coming on Friday. The week started with the minutes of the FOMC meeting revealing that policy makers were ready to cut rates in September. Later, data showed U.S. business activity fell in August, increasing bets for a Fed rate cut in September.

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Meanwhile, data from Canada showed a 0.3% drop in sales, as expected. On the other hand, core retail sales rose an unexpected 0.3%. The week ended with Powell’s speech confirming a September rate cut and sinking the dollar.

Next week’s key events for USD/CAD

Next week, the US will release figures on durable goods and GDP. Meanwhile, Canada will only release its GDP report. The US GDP report will show the state of the economy amid high interest rates. The latest report showed a bigger-than-expected expansion, indicating resilience. Another such report could reduce pressure on the Fed to reduce borrowing costs. On the other hand, a weak report could raise bets for a 50 bps rate cut.

Similarly, Canada’s GDP report will shape the outlook for a Bank of Canada rate cut. Already, markets are betting on another rate cut in September.

USD/CAD Weekly Technical Forecast: Bears break out of consolidation

Technically, the USD/CAD price has broken out of the consolidation with a large bearish candle. For a long time, the price has been trading between the 1.3601 support and the 1.3800 resistance. When the price was ready to trend, the bulls made their first attempt at the 1.3800 resistance. However, it ended up being a false escape. Price made a big wick, indicating a rejection, before returning to the range zone.

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Bears pushed the price below the 1.3601 support level with a strong red candle. The price is trading well below the 22-SMA, with the RSI in the oversold region. Therefore, the bearish trend is strong. Next week, the price may bounce back to the recently broken level before continuing to decline.

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