The USD/CAD pair has been trading at the edge of the 1.3500 area for days now. The US dollar is anticipated to give in to CAD in the coming days amid the trade war tensions and mixed economic reports.
Trade tensions continued to affect market sentiment. In response to the US tariffs, China also imposed tariffs on numerous US imports. The US Federal Reserve keeps its interest rates unchanged ignoring President Trump's pressure. According to the Fed's officials, the monetary policy is at the right place, so there is no need for any upward or downward changes. Although there are some rumors about rate cuts this year, yet none of the Fed's officials confirmed or hinted about it in their recent speeches. Therefore, it is actually baseless. Meanwhile, US unemployment is the lowest in nearly 50 years, while inflation remains below the Fed's 2% target.
At the moment, the Fed is engaging in a broad policy review that will show how the regulator delivers jobs and stable prices. San Francisco Federal Reserve President Mary Daly also warned that the ongoing undershooting the central bank's 2% inflation target could create as many problems as exceeding it. However, she also noted that any policy changes would face a high bar.
Today's US Retail sales report is expected to reflect a significant decrease to 0.2% from the previous value of 1.6%, and the Core Retail Sales data is also anticipated to drop to 0.7% from the previous value of 1.2%. Additionally, the US Capacity Utilization Rate is to have a slight decline to 78.7% from the previous value of 78.8%, Business Inventories reading is likely to fall to 0.0% from the previous value of 0.3%, and FOMC Member Quarles is going to speak today about the upcoming monetary policy decision that is not expected to have any major impact.
On the other hand, Canada's CPI report is going to be published today, it is forecast to lower to 0.4% from the previous value of 0.7%, while the Common CPI, the Median CPI, and the Trimmed CPI are anticipated to remain unchanged. The Crude Oil West Texas Intermediate (WTI) Futures were trading around $61.11 per barrel, 0.1% up for the day. As there is an inverse relationship between crude oil and the Canadian dollar, the oil price upsurge should press down the pair.
As for the current scenario, both currencies are affected by the upcoming economic reports. However, CAD has a better market sentiment with a high close in the stock market, as the Central Bank remained hawkish with the recent statement.
Now, let us look at the technical view. Currently, the price is below the 1.3500 area with a daily close. It formed a Bearish Divergence. The pair is expected to move lower towards 1.3350 and later towards the 1.3200 area in the coming days. As far as the price remains below the 1.3500 area, the bearish bias is likely to continue.
