USD/CAD Price Prediction – USD/CAD faces downward pressure amid heavy selling of the dollar

Key Insights

• Gold prices move higher as a safe-haven asset.
• Treasury yields rise ahead of Fed speak.
• Oil prices tumble as demand increases and Shanghai prepares for reopening. 

USD/CAD moves lower as the prospect of slower growth and weakness of the dollar weighs on the currency pair. Gold prices rallied on Monday as investors’ concerns over inflation skyrocketed and they piled the precious metal as a safe haven.

The dollar faced downward pressure due to possible movement toward recession. Benchmark yields rose as investors rotated out of bonds and poured into equities today. The ten-year yield increased by 3 basis points today.

Oil prices fell as demand rose due to the easing of Shanghai lockdowns. The decline in oil prices undermine the Loonie and capped losses for the currency pair.

The economic calendar was light on Monday. Investors’ focus remains on Fed Chair Powell’s remarks tomorrow and key economic data including PCI and first-quarter GDP released this week.

Worse-than-expected GDP could mean further downward pressure on the dollar. Investors remain concerned about a potential recession and slowing economic growth.

Technical Analysis

The USD/CAD dropped to an over two-week lower but recovered to just below the 1.28 level amid heavy selling of the dollar. The currency pair is headed for a pullback, favoring bears.

USD/CAD may test the support of the 1.272 region, which will act as a decisive level for the direction of the pair. If broken, USD/CAD may decline to sub 1.2700 levels. 

Resistance is seen near the 10-day moving average of 1.28. Support is seen near the May 5th low near 1.27. Short-term momentum turned negative as the fast stochastic had a crossover sell signal. 

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 MA of the MACD line).

The trajectory of the MACD is in negative territory, which reflects a downward trend in price movement.