USD/CAD continues to rise, ahead of American PMIs

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• USD/CAD sets a six out of the last seven days of gains and rose to 1.3550, trading its highest since early June.
• The USD gained momentum during the American session, and the DXY index rose to 103.56.
• Lower Oil prices apply pressure on the CAD.

In Tuesday’s session, the USD/CAD continued to gain ground, mainly driven by the broad-based CAD weakness. On the other hand, investors await key manufacturing and services sector PMIs from August to be released. Eyes are also set on Powell’s speech on Friday at the annual Jackson Hole Symposium.

The USD is trading somewhat weak against most of its rivals, primarily due to investors showing more interest in risk-sensitive assets. On the data front, Existing Home Sales from the US came in slightly lower than expected at 4.07M in July vs the 4.15M expected and the previous 4.16M but failed to impact the Greenback significantly. 

For the rest of the week, the focus shift to the Jackson Hole Symposium, which will kick off on Thursday, and on Wednesday, the American economic calendar will feature S&P Global PMI data which is expected to show a deceleration in the US service and manufacturing sector.

On the CAD front, no relevant data will be released during the session, and the weakness of Oil prices is contributing to the Canadian currency decline. In that sense, due to Chinese economic concerns, the black gold prices continue to retreat and fell to their lowest point since early August.

USD/CAD Levels to watch

Evaluating technical indicators, the USD/CAD displays a short-term bullish outlook. Nevertheless, traders should take caution due to the emergence of overbought signals, which may lead to a technical correction in the near term. The Relative Strength Index (RSI) is in overbought territory above 70.00, while the Moving Average Convergence (MACD) histogram exhibits more oversized green bars. In addition, the pair is above the 20,100,200-day Simple Moving Averages (SMAs), indicating a favourable position for the bulls in the bigger picture.

Support levels: 1.3530, 1.3500, 1.3490.

Resistance levels: 1.3570, 1.3590, 1.3600.

USD/CAD Daily chart

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• Source: https://www.fxstreet.com/news/usd-cad-continues-to-rise-ahead-of-american-pmis-202308221550