On Tuesday, USD/CAD develops a downward correction that originated at the end of last week and tries to gain a foothold below the key support of 1.2950.
Market activity is currently low, as many trading platforms were closed at the beginning of the week.
Buyers of USD/CAD are supported by the aggressive tightening of the Fed's monetary policy, especially since a number of officials called for a 75 basis point rate increase in July.
A block of statistics from Canada will be released today. According to forecasts, the May housing price index will grow by 0.8%. Sales dynamics for April will also accelerate by 0.8%.
However, the most important release – the May consumer inflation index will be published tomorrow.
Canadian MP Candice Bergen criticized Prime Minister Justin Trudeau. She believes that the government is not taking proper measures to combat galloping inflation and is delaying the complete lifting of quarantine restrictions on COVID-19, which makes it difficult for citizens to move inside the country and hinders economic recovery.
USD/CAD Technical Analysis
According to daily, the Bollinger Band indicator is confidently pointing upwards, while the MACD, although it remains in a positive area, has already turned to decline, while maintaining a buy signal.
The stochastic oscillator has left the overbought area and continues to decline.
After a confident breakthrough of 1.2900 support, we form sales with a take profit of 1.2800. We will set the stop loss at 1.2950.
With a rebound from 1.2900, we are waiting for a breakdown of the resistance of 1.2950 and return to long positions with the nearest target of 1.3050. We will set the stop loss at 1.2900.