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USDCAD Ready for the manipulation post CPI - Target 1.35!

Currently, I am observing a negative trend of the United States Dollar (USD) against the Canadian Dollar (CAD) in the markets. My primary focus is on the data of the US Consumer Price Index (CPI) as it is crucial for my forecasts. These data will have a significant impact on expectations regarding inflation and the policy of the United States Federal Reserve (Fed), and these expectations will influence the short-term direction of the USD. It's important to note that the CAD is receiving support from higher oil prices, and this is a factor to consider in my analysis. Oil prices are experiencing a recovery, likely due to growing geopolitical tensions in the Middle East and news about the US plans to replenish their strategic oil reserves.

I am closely monitoring forecasts for the US CPI, which predict an annual inflation increase of 3.1%, slightly below the 3.2% recorded in October, while the Core CPI is expected to remain stable at 4%. These data will be crucial for the Federal Reserve's monetary policy decision, which will be announced tomorrow. Additionally, I am considering the effect of these figures on market expectations regarding a possible change in Fed policy. Investors are speculating on the possibility that the Fed may alter its position, and any surprises in inflation data could have a significant impact on the value of the US Dollar.

However, despite the current support for the CAD related to oil prices, it is essential to keep in mind that this rally may be short-lived. Concerns about oversupply in the oil market persist, despite the OPEC+ agreement to extend production cuts. Global oil demand is expected to decrease in the coming months, which could jeopardize the sustainability of the oil price rally.