USD/CAD Held in the Upper End of Its Range Amid Easing Geopolitical Tensions

The dollar rose against the Loonie amid the risk-on mood and easing geopolitical tensions. The US benchmark ten-year yield accelerated to 2.03%, while gold prices eased off their eight-month highs. The easing geopolitical tensions also weighed on the dollar but led to stronger gains inequities. Market participants will closely monitor how aggressively the Fed plans to hike rates in March.

Technical Analysis

The USD/CAD moved higher against the Loonie as cooling geopolitical tensions led to the dollar holding in the upper end of its range at CAD1.28. Resistance is seen near a downward-sloping trend line near 1.28. Support is seen near the 50-day moving average near 1.27. Short-term momentum turns negative as the fast stochastic generates a crossover sell signal. The exchange rate moves toward oversold territory, reflecting accelerating negative momentum. Medium-term momentum is positive as the MACD (moving average convergence divergence) index generates a crossover buy signal, but momentum decelerates. This scenario occurs as 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 positive territory with an upward sloping trajectory.

The January US PPI Beats Expectations Amid Inflation Concerns

The PPI increased to 9.7% year-over-year from January 2021 to 1% in January 2022 as inflation surges. The Dow Jones estimate for January 2022 was 0.9%. The PPI measures the final demand for goods and services. The core PPI, which excludes food, energy, and trade services, surged 0.9% for the month. Good prices rose more than service prices, rising 1.3% and 0.7%, respectively, in line with the pandemic readings.