• Minutes from Wednesday’s FOMC meeting showed policymakers are prepared to cut rates in September.

• US economic activity fell in August.

• Powell confirmed in his speech that interest rates would be cut in September, causing the dollar to fall.

The weekly forecast for USD/CAD indicates a downtrend, with the Canadian dollar gaining while the US dollar weakens after Powell’s speech.

USD/CAD Highs and Lows

The USD/CAD pair had a bearish week, with most of the movement on Friday. The week started with the FOMC meeting minutes, which showed that policymakers were ready to cut rates in September. Then, data showed that US business activity fell in August, increasing bets on a Fed rate cut in September.

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Meanwhile, data from Canada showed a 0.3% decline in sales, as expected. On the other hand, core retail sales rose by an unexpected 0.3%. The week ended with Powell’s speech confirming a September rate cut, sending the dollar tumbling.

Key Events for USD/CAD Next Week

Next week, the US will release core durables and GDP figures. Meanwhile, Canada will only release its GDP report. The US GDP report will show the state of the economy amid high interest rates. The last report showed a larger-than-expected expansion, suggesting resilience. Another such report could ease the pressure on the Fed to cut borrowing costs. On the other hand, a bad report could raise bets on a 50bps rate cut.

Similarly, Canada’s GDP report will shape the outlook for rate cuts from the Bank of Canada. Markets are already betting on another rate cut in September.

USD/CAD Weekly Technical Forecast: Bears Break Out of Consolidation

On the technical side, the USD/CAD price broke out of the consolidation with a big bearish candle. The price traded between the 1.3601 support and the 1.3800 resistance for a long time. When the price was ready to trend, bulls made the first attempt to reach the 1.3800 resistance. However, it ended in a false breakout. The price made a big wick, indicating a rejection, before returning to the range area.

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Bears pushed the price below the 1.3601 support level with a strong red candle. The price is trading well below the 22-SMA, with the RSI in the oversold region. Therefore, the bearish bias is strong. Next week, the price may revisit the recently broken level before falling further.

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