According to recent developments, the end of the first quarter was weak, and this, coupled with the negative but temporary effect of the public sector strike on Q2 GDP, could potentially increase the risk of a contraction in economic activity during the second quarter. Despite this, the Bank of Canada remains determined to focus on trying to get and keep inflation and inflation expectations under control, even if it means overlooking the volatility caused by the strike. Although a weakening economy should prevent policymakers from triggering another interest rate hike.
As previously predicted, the technical analysis of USD/CAD shows a pullback of the price on the 61.8% Fibonacci area, which is precisely on the resistance level drawn at 1.36500. Following the pullback, the price has started to decline, confirming our short setup idea for this specific currency pair.