• USD/CAD steadied around 1.3745 on Wednesday as commodity linked loonie dipped as oil prices fell on increased hopes of a deal to end the Middle East conflict.
• Data on Tuesday showed Canada’s consumer price index rose 2.8% year-on-year in April, below forecasts for 3.1%, while key underlying inflation measures also eased.
•The swap market has priced in about 40 basis points of tightening from the BoC this year, down from 54 basis points before the inflation data.
•Bank of Canada has said that it might have to respond with consecutive interest rate hikes if oil prices stay high and begin pushing up inflation.
• Geopolitical concerns eased after President Donald Trump said the Middle East war would end “very quickly,” while Vice President JD Vance highlighted progress in peace negotiations.
• Immediate resistance is located at 1.3758(50%fib), any close above will push the pair towards 1.3801(Higher BB).
• Support is seen at 1.3662 (50%fib) and break below could take the pair towards 1.3574(Lower BB).
Recommendation: Good to buy around 1.3730, with stop loss of 1.3640 and target price of 1.3800
