Advertisement
Advertisement

USD/CAD Exchange Rate Prediction – The Dollar Surges Following Fed Chair Announcement

By:
David Becker
Updated: Nov 22, 2021, 18:12 UTC

A rally in short-term yields buoyed the greenback

USD/CAD Exchange Rate Prediction – The Dollar Surges Following Fed Chair Announcement

The dollar moved higher against the Loonie, rising 0.45% after rising 0.8% last week.  Yields moved higher on Monday as President Biden renominated Federal Reserve Chief Jerome Powell due a second term. The increase in yields helped the differential move in favor of the greenback, which buoyed the U.S. currency.

Technical analysis

The dollar moved higher and is poised to test trend line resistance near 1.28. Support is near the 10-day moving average, 1.2650. The 10-day moving average cross above the 50-day moving average, which means that a short-term uptrend is almost in place. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. The exchange rate is overbought with the fast stochastic printing a reading of 99, above the overbought trigger level of 80. Medium-term momentum has turned positive as the MACD (moving average convergence divergence) index is generated a crossover buy signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line).

Federal Reserve Chair Keeps His Spot

President Biden renominated Fed Reserve Chair Jerome Powell as to remain at the helm as Lael Brainard was nominated to the Vice-Chair of the Federal Reserve. Both candidates will need 50-votes in the Senate to be approved. The continuity provided by renominating Jerome Powell, a Republican appointed by former President Trump, was well received by market participants. Yields rose because many believe that Powell will be more aggressive with interest rate hikes than Brainard.

About the Author

David Becker focuses his attention on various consulting and portfolio management activities at Fortuity LLC, where he currently provides oversight for a multimillion-dollar portfolio consisting of commodities, debt, equities, real estate, and more.

Did you find this article useful?

Advertisement