Key Insights
- The dollar broke lower versus the Loonie.
- Treasury yields reversed course and moved lower.
- Trade data showed imports declined relative to exports.
USD/CAD moved lower breaking down through trend line support. The 10-year Treasury reversed course after closing above 3% on Monday. The decline in yields weighed on the greenback.
The U.S. Commerce reported that the trade gap in goods and services fell to 19.1% in April from the prior month to $87.1 billion, retreating from March’s record $107.7 billion deficit. Imports fell 3.4% to $339.7 billion, the first month-on-month decline since July last year. Exports continued their upward trend in recent months, rising 3.5% to $252.6 billion.
Technical Analysis
The USD/CAD broke lower, pushing through trend line support. Target support is seen near an upward sloping trend line that comes in near 1.2450. There is strong resistance near the 200-day moving average at 1.2657. The 10-day moving average crossed below the 50-day moving average which means that a short-term downtrend is now in place.
Short-term momentum has turned negative as the fast stochastic had a crossover sell signal. Prices are oversold. The fast stochastic is printing a reading of 0, below the oversold trigger level of 20.
Medium-term momentum turns negative as the MACD line might generate a crossover sell 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 M.A. of the MACD line). The trajectory of the MACD is in positive territory, which reflects an upward trend in price movement.
