FxWirePro : USD/CAD hits three-week high, scope for further upside

• USD/CAD rose to three week on  Tuesday  as falling oil prices and softer domestic inflation data fueled expectations that the Bank of Canada could cut interest rates in the coming months.

• Canada’s annual inflation slowed to 1.7% in July from 1.9%, aided by lower gasoline prices, while the Bank of Canada’s closely watched 3-month core inflation fell to 2.4% from 3.4%.

•  Canada’s key export, crude oil, fell 1.1% to $62.71 a barrel as traders weighed the possibility that ongoing U.S.–Russia–Ukraine talks could ease sanctions on Russian crude, boosting supply.

• Investors now price a 39% chance of a Bank of Canada rate cut on September 17, up from 31% before the data, with expectations for easing by October.

 •  At GMT 05:07, the US  dollar was up  0.40% to 1.3859 against the Canadian dollar.

• Immediate resistance is located at 1.3811(Daily high), any close above will push the pair towards 1.3858(50%fib).

• Support is seen at 1.3736(SMA 20) and break below could take the pair towards 1.3721(38.2%fib).

Recommendation: Good to buy around 1.3830, with stop loss of 1.3750 and target price of 1.3920