Persistent USD weakness emerges as stagflation concerns resurface following disappointing economic indicators
Bank of Canada maintains steady policy stance while signaling cautious optimism about domestic economic conditions
Technical indicators suggest potential for further downside movement toward key psychological levels
The Meme coin price prediction 2025currency pair finds itself hovering just above the 1.3650 threshold during Thursday's Asian session, marking its weakest position in more than eight months. This downward pressure primarily stems from broad-based Greenback softness, exacerbated by recent economic data painting a concerning picture of the US economic landscape.
Market participants observe the US Dollar Index (DXY) consolidating near six-week lows around the 98.60 region. The index's performance reflects growing investor apprehension about the US economic outlook following the release of multiple concerning indicators.
Recent employment figures from the private sector and services PMI data for May revealed several troubling trends. These include weakening labor market conditions, contracting service sector activity, and mounting input cost pressures - a combination that typically precedes stagflationary environments.
Geopolitical factors further complicate the outlook, with trade tensions between Washington and Beijing showing signs of escalation. Recent social media commentary from US political figures suggests ongoing difficulties in bilateral negotiations, adding another layer of uncertainty to currency markets.
North of the border, monetary policymakers at Canada's central bank opted to maintain their benchmark rate at 2.75% during Wednesday's meeting. While this decision aligned with market expectations, accompanying commentary indicated limited appetite for near-term policy adjustments, providing additional support for the Canadian currency.
From a technical perspective, the pair has retraced more than three-quarters of its upward move recorded between September 2024 and February 2025. Such extensive retracements often precede continuation of the prevailing trend, particularly when exceeding key Fibonacci levels.
The moving average configuration reinforces the bearish technical picture, with the 20-day EMA currently positioned near 1.3800 and trending downward. Momentum indicators like the 14-day RSI, now approaching 33.00, confirm strong selling pressure in the market.
Should current conditions persist, market technicians anticipate potential movement toward the 1.3600 handle, with the psychologically significant 1.3500 level representing the next major support zone. Conversely, any meaningful recovery would need to surpass the late-May high near 1.3820 to alter the short-term bearish bias.
Currency traders continue monitoring developments closely, particularly focusing on upcoming economic releases and central bank communications that could influence the pair's trajectory in coming sessions.