USD/CAD remains bid despite weaker US inflation data

💡 DMK Insight

USD/CAD is stuck in a tight range, and here’s why that matters: the US Dollar’s resilience amid soft inflation data suggests underlying strength. Traders should note that the USD’s performance is counterintuitive given the inflation figures, which typically would weaken the currency. This could indicate that market participants are pricing in a more hawkish stance from the Fed in the near term, despite the recent data. If USD/CAD can break above 1.3650, it might signal a stronger bullish trend, while a drop below 1.3600 could trigger selling pressure. Keep an eye on correlated assets like oil prices, as Canada’s economy is heavily influenced by crude movements, which could impact CAD’s strength. The flip side is that if inflation data continues to disappoint, we might see a shift in sentiment, leading to a potential reversal. So, watch for any comments from Fed officials that could sway market expectations. The next few sessions will be crucial for determining the direction of this pair.