USD/CAD hits a new weekly high at 1.2652, consolidates ahead of Fed’s minutes

• The loonie consolidates around 1.2635/50 range.
• Canada’s inflationary pressures rise, will the BoC slow the pace of its bond purchase program.
• DXY consolidates around 93.24, up 0.11%.

USD/CAD consolidates throughout the session, trades around 1.2635 up 0.05%. The mood of the market, remains unchanged, with fear of slower economic recovery than expected, weighed on by the Delta variant outbreak.

Previously in the session, the prices reached a low of 1.2600 on an inflation rise in Canada. The CPI rose from 0.1% to 0.6%, a 0.5% increment on the monthly basis. In regards to the year-over-year, inflation hits 3.3% from 2.7% in the month of June. The base scenario for bond tapering in Canada remains on the table.

In concerns to the US dollar, the DXY trades higher at 93.24 a 0.11% gain. This could mean that investors are squaring off their positions, while they wait for the Federal Reserve, to release its last meeting minutes at 18:00 GMT.

USD/CAD technical outlook

At the time of writing, the pair reaches a weekly new high, at 1.2652. As the price trades above yesterday’s high, this could open the door for a move towards 1.2800. On the way towards that target remains 1.2700 and the high of July 21 at 1.2729. Concerning the moving averages, the 200-day moving average was left behind at 1.2558, while the 50 and the 100-DMA’s are at 1.2455 and 1.2367 as levels of support for the Loonie. This confirms short-term dollar strength.

RSI is 61.62 and headed north, while the Average True Range (ATR) depicts reduced volatility, and heads lower at 64 pips.

In the 1-hour chart, the pair is testing yesterday’s high at 1.2648. If the level holds, this could open the door for a retest of 1.2600 in the short term. Nevertheless, the Average True Range (ATR) is 14 pips, and heading towards lower readings, so we could expect consolidation around 1.2635/50.