USD/CAD jumps above the 1.3370 zone amid strong US Dollar

• USD/CAD jumped to a daily high of 1.3384 following four days of losses.
• Strong Dollar and falling Oil prices weigh on the CAD.
• All eyes are on Tuesday’s inflation data from the US.

During Monday’s session, the USD/CAD cut a four-day losing streak jumping to a daily high of 1.3384 as the US Dollar held its footing ahead of an eventful week. On the other hand, the Lonnie seems to be suffering from the plunge in Oil prices which have seen losses of more than 3% on the day.

Attention shifts to CPI data and Fed decision

Markets seem to be awaiting the upcoming release of the US Consumer Price Index (CPI) data for May to define direction. It is anticipated that the headline figure will show a slowdown to a year-on-year (YoY) rate of 4.1%, while the Core measure is expected to decline from the previous 5.5% YoY to 5.3%.

In addition, the CME FedWatch Tool, currently suggests a 25% chance of an interest rate hike for the upcoming Wednesday’s Federal Reserve (Fed) decision. Moreover, rate cuts are no longer anticipated by the end of the year, so market participants will keep an eye on Fed Chair Powell’s presser on Wednesday looking for clues regarding forward guidance

On the Canadian side, the CAD bulls seem to have taken a step back and are consolidating gains from last week’s Bank of Canada (BoC) surprising 25 basis point (bps) hike. Moreover, the Loonie seems to be facing further weakness amid Oil’s heavy losses as the WTI (Western Texas Intermediate) is down by 3.60% on the day, trading at the $67.45 level.

USD/CAD levels to watch

According to the daily chart, the USD/CAD shows a neutral to bearish perspective for the short term. Despite indicators having gained some traction, they are still operating in negative territory. The Relative Strength Index (RSI) sits below its midline but exhibits a positive slope. while, the Moving Average Convergence Divergence (MACD) printed a decreasing red bar, indicating diminishing selling momentum.

The 1.3350 zone level is key for USD/CAD to maintain its upside bias. If breached, the price could see a steeper decline towards the 1.3310 area and towards the multi-month low at 1.3300. Furthermore, upcoming resistance for USD/CAD is seen at the zone at 1.3380 level, followed by the psychological mark at 1.3400 and the 1.3450 area.

USD/CAD daily chart