• USD/CAD steadied around 1.3970 on Wednesday as investors focused on trade developments after a strong start to the week, influenced by soft U.S. inflation and Washington's trade truce with China.
•Tuesday’s softer-than-expected U.S. inflation data eased investor concerns over the inflationary impact of U.S. tariff policies, reviving hopes for near-term Fed rate cut that had been previously dampened.
• Federal Reserve Vice Chair Philip Jefferson stated that recent inflation data show progress toward the Fed’s 2% target. However, he cautioned that the outlook remains uncertain, as possible new import tariffs could push prices higher.
• Traders are now pricing in 56 basis points of rate cuts for this year, down from over 100 basis points projected in April amid peak concerns over Trump’s tariffs.
• At GMT 15:54, the dollar was trading up 0.27 percent at 1.3973 against Canadian dollar.
• Immediate resistance is located at 1.3983 (38.2%fib), any close above will push the pair towards 1.4073(23.6%fib).
• Support is seen at 1.3917 (50%fib) and break below could take the pair towards 1.3845(61.8%fib).
Recommendation: Good to buy around 1.3950, with stop loss of 1.3870 and target price of 1.4050
