The Dollar Broke Out Above Trend line Resistance

• The dollar broke out against the Loonie
• The dollar index continued to receive a safe-haven bid.
• U.S. yields moved higher, giving the greenback a lift
• Risk assets came under pressure as the war dominated the headlines
• Commodity prices like Oil and gold surged

The dollar broke out against the Loonie. Geopolitical risks helped the dollar and short-term treasury yields rise next week ahead of the Fed. The President announced that the U.S. would not purchase Russian Oil.

Riskier assets whipsawed, moving higher and lower as oil prices rose. In January, U.S. trade deficit hit a new record as energy imports while exports fell. Strong demand, which took foreign goods off the shelves of U.S. stores, drove imports to record levels. Inflation continues to rise ahead of the Fed’s central bank meeting next week.

Technical Analysis

The USD/CAD broke out above trend line resistance. Support near the 10-day moving average that comes in near $1.2740. Resistance on the currency pair is seen near 1.2964. Short-term momentum is positive as the fast stochastic generated a crossover buy signal. The fast stochastic is printing a reading of 95, above the overbought trigger level of 80.

The medium-term momentum is positive as the MACD line generated a crossover buy signal. This scenario happens when the MACD line (the 12-day moving average minus the 26-day moving average) crosses the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram prints positively. The trajectory of the MACD histogram is upward sloping, which likely points to upward prices.