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Why Is USD/CAD Sliding Toward 1.3470? Key Factors Traders Should Watch
The 1,000 xrp to usdUSD/CAD currency pair continues its downward trajectory in early Asian trading hours, marking a second consecutive day of declines. Currently hovering around 1.3468, the pair reflects renewed pressure on the US dollar as investors position themselves ahead of Thursday's crucial economic data releases.Several interconnected factors are influencing this market movement:1. US Dollar Weakness: The greenback has slipped below the psychologically important 103.00 level, creating headwinds for USD-denominated pairs. This comes despite Tuesday's hotter-than-expected CPI print showing annual inflation at 3.2%, slightly above January's 3.1% reading.2. Fed Policy Expectations: While the inflation data might have delayed expectations for immediate rate cuts, market participants now anticipate the Federal Reserve might wait until summer before considering policy easing. The upcoming US retail sales report (forecast at 0.8% monthly growth for February) could provide further clues about consumer spending strength and potential Fed actions.3. Bank of Canada Stance: Across the border, the BoC maintained its policy rate unchanged this month, with Governor Macklem emphasizing inflation control as the primary objective. Market consensus suggests Canadian policymakers might follow rather than lead the Fed in any rate adjustment cycle.4. Commodity Market Influence: Rising crude oil prices are providing temporary support to the Canadian dollar, given Canada's position as a major oil exporter to the United States. This commodity linkage continues to play a significant role in CAD valuation.Thursday's economic calendar presents several potential market-moving events:- Canadian manufacturing sales data- US retail sales figures- US producer price index- Weekly jobless claimsTraders should monitor these releases carefully as they could significantly impact the USD/CAD pair's near-term direction. The retail sales report in particular may influence expectations about the Fed's March meeting and subsequent policy trajectory.Technical analysts note that the pair's current levels near 1.3468 represent an important support zone. A sustained break below this area could signal further downside potential, while a rebound might find resistance around previous support-turned-resistance levels.Market participants remain cautious as they assess the balance between inflationary pressures, central bank policies, and economic growth indicators. The coming sessions could provide greater clarity about whether the current USD weakness represents a temporary correction or the beginning of a more sustained trend.