As USDCAD approaches the key 1.3250 support level, talks about the US debt ceiling are starting to heat up. Following a strong jobs report from both the US and Canada, USDCAD fell, aided by a three-day jump in oil prices. There are now two important events to watch for this week.
Firstly, President Biden will meet with congressional leaders to discuss the debt ceiling. The limit is expected to be reached in approximately one month, but no deal is currently in sight. Today’s meeting could be the first step towards a resolution, but expectations for a positive outcome are slim at this point. Today’s meeting could turn the attention of traders to this topic and have a negative effect on the US dollar.
The second event is the CPI (Consumer Price Index). There are indications of a slowdown in inflation fall in the ISM data, and employment numbers from last week were very strong. Particularly, the core CPI could be a game changer for the US dollar. A weak CPI, coupled with no resolution from the meeting, could threaten the 1.3250 support level in the coming days. A break below could lead the USDCAD to the two-year long trendline, which is currently near 1.2980.
On the other hand, the 1.3250 support level is a strong one. As long as it holds, downward movements could be viewed as buying opportunities for the short to medium term.
