USD/CAD Outlook: Bearish Amid Optimistic Canadian GDP

Heading into Friday, the USD/CAD outlook is bearish, riding the waves of continued dollar weakness. This bearish move came after Thursday’s data unveiled a weakening trend in US inflation for October. US consumer spending moderately increased in October. Meanwhile, the annual inflation rise was the smallest in over 2 1/2 years. Notably, the eagerly anticipated personal consumption expenditures (PCE) price index in October showed a 3% rise from a year ago. It was a slowdown from a three-month streak of 3.4% readings. However, it is still above the Fed’s 2% target.Federal Reserve policymakers indicated on Thursday that the US central bank’s interest rate hikes are likely concluded. Still, they kept the option open for further monetary policy tightening if progress on inflation falters. Market indicators show a 97% likelihood of the Fed maintaining rates in its December meeting. Moreover, there’s a 46% chance of a rate cut in March next year, compared to a 27% chance the previous week.Surprisingly, the Canadian economy shrank at an annualized rate of 1.1% in the third quarter, avoiding a recession. However, the data revealed growth weakening before the upcoming interest-rate decision. The economy sidestepped a technical recession, defined as two consecutive quarter-on-quarter contractions. USD/CAD key events today

 USD/CAD technical outlook: RSI reflects weaker bearish momentumUSD/CAD 4-hour chartPrice action and indicators on the 4-hour chart point to a bearish bias for USD/CAD. Notably, the price has made lower highs and lows, indicating a downtrend. Initially, bears paused at the 1.3550 support level, where the price was oversold. It led to a pullback to the 30-SMA, where bulls challenged the downtrend. However, bearish momentum was still strong, as the price made a bearish engulfing candle from the SMA.Consequently, the price fell and broke below the 1.3550 support. Still, a closer look at the RSI shows weaker bearish momentum. Although bears made a new low, the RSI made a higher low, indicating a divergence. However, bears will only lose control if the price breaks above the SMA.More By This Author:EUR/USD Forecast: Dollar Recovers on Robust US GDP GrowthGBP/USD Price Stalls as Buyers Fear US Prelim GDP DataAUD/USD Price Analysis: Bulls Hit 4-Month Top Despite Low CPI