USD/CAD Holds Firm as Dollar Strengthens and Yields Rise Key Insights

Key Insights

• Gold and silver prices increase due to safe-haven appeal amid rising inflation.
• The ten-year yield hit its highest level in three years.
• Oil prices moved higher in choppy trading due to tight supply concerns.

USD/CAD holds steady as increasing risk-off sentiment points toward bullish sentiment among traders. The ten-year yield reached its highest level in three years near 2.849% as investors monitor inflation from last week’s data and the Russia-Ukraine War. 

Gold prices rally, hitting a one-month high due to growing inflation concerns. Oil prices moved higher as tight global supply problems are exacerbated by outages in Libya. Minor disruptions have an outsized effect on price movement.  

Rising mortgage rates and supply chain disruptions weigh on homebuilder sentiment. Builder confidence for single-family homes slid 2 points to 77 in April. The average 30-year mortgage rate was roughly 3.90% at the beginning of March.

The rate currently stands at 5.15%, the highest rate in over a decade. Climbing mortgage rates cause rising prices for new and existing homes.

Technical Analysis

The USD/CAD remains above $1.26 amid the risk-off mood that underpins the dollar. A hawkish Fed, rising benchmark yields, and growing inflation concerns lead to a bullish tone among investors. Resistance is seen near the 50-day moving average of 1.265. Support is seen near the 10-day moving average of 1.258. 

Short-term momentum turned positive as the fast stochastic had a crossover buy signal. 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 MA of the MACD line).