The Canadian Dollar regained ground following the release of the U.S. PMI, which bolstered hopes of a rate cut

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The Canadian Dollar (CAD) advanced against the U.S. Dollar (USD) after U.S. Purchasing Managers’ Index (PMI) figures came in weaker than expected. The moderation in economic activity in the U.S. fuels market hopes that the U.S. economy will weaken enough to prompt the U.S. Federal Reserve (Fed) to expedite interest rate cuts.

Canada will release its latest retail sales figures on Wednesday, but market focus will be on U.S. Gross Domestic Product (GDP) figures due out on Thursday. The Personal Consumption Expenditures (PCE) Price Index will be released on Friday.

U.S. PMI indices unexpectedly softened on Tuesday. The S&P Global Manufacturing PMI fell to 49.9, below the 50.0 level for the first time in four months. The Services PMI also lost ground, dropping to 50.9 from the previous 51.7.

Despite weakness in the U.S. Dollar, the Canadian Dollar trades mixed against major currencies as falling crude oil prices weigh on the CAD.

Wednesday expects to see Canadian retail sales for February rebound to 0.1% from January’s -0.3%. Canadian retail sales excluding automobiles are expected to hold steady at 0.0% versus January’s 0.5%.

Technical analysis of the Canadian Dollar: CAD poised to continue higher, but strong support zone looms

The Canadian Dollar traded mixed on Tuesday. It gained about a fifth against the U.S. Dollar and Japanese Yen (JPY), but lost half a percentage point against the British Pound (GBP).

The USD/CAD lost the 1.3700 zone as the Dollar retreated against the Canadian Dollar. The pair reached an intraday support zone near 1.3660, and further down, approaches a significant demand zone near 1.3600. With Tuesday’s bearish momentum, the pair is on track to close in the red for the fifth consecutive day.

The primary support lies at the 200-day Exponential Moving Average (EMA) just north of the 1.3500 level. A resurgence in U.S. Dollar buying could drag the USD/CAD back towards the recent swing high near 1.3850.