USD/CAD Moves to the Lower End of Its Range Ahead of the Release of Fed Minutes

The dollar was pushed lower against the Loonie as investors become less worried about geopolitical tensions and wait for the release of Fed minutes. The US benchmark ten-year yield remains little changed near 2.03% amid strong retail sales numbers. Gold prices edged higher, holding below their eight-month high as the safe-haven asset holds its appeal as a hedge against inflation. Expectations that the Fed will raise rates will likely limit the dollar’s losses.

Technical Analysis

The USD/CAD moved lower against the Loonie to the lower end of its range. Resistance is seen near a downward-sloping trend line near 1.28. The exchange rate broke below the former support level seen near the 50-day moving average near 1.27. Supper is seen near an upward-sloping trend line from the February lows of 1.26. Short-term momentum turned 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 a downward sloping trajectory.

US January Retail Sales Accelerated More Than Expected

January retail sales increased by 3.8%, beating the Dow Jones estimate of 2.1%. Retail sales declined by 2.5% in December. January readings reflect mounting inflation pressures and increasing consumer demand. Online shopping contributed most to the substantial increases, as non-store retailers saw gains of 14.5%. Food and drink establishments sales dipped by 0.9% in January.