USD/CAD continues its upward trajectory, reaching 1.3750 as the US Dollar exhibits a rebound

The USD/CAD currency pair is on the rise, hitting a key resistance level at 1.3750 during the European trading hours on Wednesday. The Canadian Dollar, colloquially known as the Loonie, gains momentum as the US Dollar bounces back from its recent dip. This recovery follows Federal Reserve (Fed) Chair Jerome Powell’s unexpectedly moderate stance on future interest rate hikes, as indicated in the latest monetary policy meeting where he suggested a possible reduction in rates within the year.

The US Dollar Index (DXY), a measure of the US Dollar’s strength against a basket of six major currencies, continues its upward movement, reaching 105.50. With a relatively quiet US economic docket, market participants are looking to speeches from Federal Reserve officials for hints on the Dollar’s direction. Notably, Minneapolis Fed President Neel Kashkari expressed concerns on Tuesday about the slowing pace of disinflation, particularly due to the robust housing market, and hinted that interest rates might need to stay elevated throughout the year.

For the Canadian Dollar, the upcoming release of April’s Employment data this Friday is set to be a decisive factor. Analysts predict the addition of approximately 20,000 new jobs, contrasting with a previous decrease of 2,200. The Unemployment Rate is expected to inch up to 6.2% from 6.1%. These employment figures will likely have a significant impact on the Bank of Canada’s (BoC) stance on interest rates.