- The USD/CAD price analysis shows continued dollar weakness.
- Trump’s Fed pick has raised speculation about more dovish picks in the future.
- Market participants are awaiting employment figures from Canada.
The USD/CAD price analysis shows continued dollar weakness after Trump’s pick for Fed Governor hinted at more dovishness in the central bank. At the same time, downbeat employment data added to expectations of Fed rate cuts.
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Trump picked Stephen Miran to temporarily hold the recently vacant position at the Fed. His pick has raised speculation about more dovish picks in the future. At the same time, it has raised worries about the independence of the Federal Reserve after Powell’s term. Experts believe it will be a less independent Fed.
“In many ways, it reinforces what we already knew, which is that we’re now looking at a much more political Fed and a much less independent Fed,” said Michael Brown, senior research strategist at Pepperstone.
“We’re all expecting at the September FOMC and any meeting he joins after that that he’ll be very dovish and will be pushing for large rate cuts and that that will come effectively because the President has asked him to,” said Brown.
Meanwhile, there was further downward pressure on the dollar after a jump in US unemployment claims. Market participants are now expecting employment figures from Canada.
USD/CAD key events today
- Canada employment change
- Canada unemployment rate
USD/CAD technical price analysis: Bears strive to detach from the 1.3750 key level
On the technical side, the USD/CAD price has broken below the 1.3750 key support level after a recent shift in sentiment. Initially, the price was climbing steadily in a steep uptrend until it reached the 1.3875 key resistance level. Here, there was a sudden shift in sentiment as the price formed a large bearish engulfing candlestick pattern.
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Moreover, it went on to break below the 30-SMA, showing bears had taken the lead. However, since the break, the price has remained mostly attached to the SMA. This shows that bears have not yet found their footing. To do this, they must detach from the 1.3750 key level.
When that happens, the price will likely start making lower highs and lows, confirming a downtrend. Moreover, it would allow USD/CAD to drop to the 1.3575 key support level.
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