USD/CAD Climbs Higher but Retreats after Fed Testimony

Since late January, the dollar has moved to its highest level against the Canadian dollar and then retreats following the Fed announcement of the 25-basis point rate hike. US benchmark yields hold steady, with the 10-year yield stabilizing near 1.85%. Palladium climbs to its 7-month high due to supply concerns. The US dollar moves higher on strong jobs data. The Fed will likely do a 25-basis point rate hike at the meeting on March 15-16. 

Technical Analysis

The USD/CAD remains in its range against the Loonie. Support is seen near the 10-day moving average near 1.272. Resistance is seen near the downward sloping trend line near 1.275. Short-term momentum is negative as the fast stochastic generated a crossover sell signal. The reading prints 34.00. 

Medium-term momentum turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. The MACD line (the 12-day moving average minus the 26-day moving average) converges to the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram is printing in negative territory with a downward sloping trajectory.

January US Trade Deficit Above Expectations

The US trade deficit climbed 7.1% to $107.6 billion. It reached an all-time high for the second month in a row. The deficit increased from a revised $100.5 billion in December. The reading indicates continued strength in the manufacturing sector. The US economy rebounded from the pandemic while other countries are lagging.