USD/CAD Price Forecast: Wobbles around 1.3800 ahead of US PPI data

The Canadian Dollar (CAD) trades near 1.3810 against the US Dollar (USD) during Thursday's European session. The pair holds steady as traders eye the United States Producer Price Index (PPI) data for August, due at 12:30 GMT. The US PPI is anticipated to provide clues on inflation trends and potential Federal Reserve rate decisions.

Recent estimates suggest headline inflation at the factory level rose to 5.3% YoY in August, up from 4.7% in July. The core PPI, excluding food and energy, is also expected to climb to 4.6% YoY, up from 4.2% previously. Elevated producer price pressures could signal forthcoming Federal Reserve interest rate hikes. Currently, the CME FedWatch tool indicates a 61.2% probability of a Fed rate hike at the upcoming policy meeting.

Moreover, traders will watch the US Consumer Price Index (CPI) for August, released on Friday. In the daily chart, USD/CAD is at 1.3808, below the 20-day EMA at 1.3854 and under the 61.8% Fibonacci retracement at 1.3818, signaling a cautiously bearish short-term outlook. The RSI at 41.7 is below the neutral 50 level, indicating weak upside momentum as the pair remains trapped between these resistances.

On the upside, immediate resistance lies at the 61.8% retracement at 1.3818, followed by the 20-day EMA at 1.3854. Key support levels include the 78.6% retracement around 1.3701 and the 100% retracement near 1.3551, which could attract stronger buying interest if the decline persists.