USD/CAD Price Prediction – USD/CAD remained little changed despite the ease in oil prices

Key Insights

• Gold prices held steady despite the equity sell-off. 
• Treasury yields declined as investors rushed to bonds.
• Oil prices fall as US companies plan to increase supply. 

USD/CAD ended the day in the red despite recovering from a drop after Canadian inflation figures. However, these figures pointing toward a more hawkish BoC have failed to underpin the Loonie.

The dollar rallies to two-decade highs as investors place bets longing the dollar. Benchmark yields erased gains as investors piled into bonds due to the sell off in stocks. 

The Dow and Nasdaq suffered immense losses today as poor earnings reports heightened concerns over inflation. The ten-year yield slid by 9 basis points today. Oil prices tumbled as US companies plan to raise output, which counters supply issues from the Russian oil embargo.

April housing starts declined by 0.2% amid rising mortgage rates. The 30-year loan rose to 5.3% last week from 2.94 a year ago. Spiraling inflation combined with high material prices has weighed on the housing market. 

Philadelphia Fed President Harker stated that the Fed will have two 50-basis point hikes in June and July at the FOMC meetings.

Technical Analysis

The USD/CAD held near the 1.287 level. A pullback in oil prices and worsening macroeconomic sentiment underpins the dollar. The currency pair has made a top and faces downward momentum. USD/CAD is headed for the 1.27s region. 

Resistance is seen near the 10-day moving average of 1.292. Support is seen near the May 5th low near 1.27. Short-term momentum is positive as the fast stochastic had a crossover buy 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 positive territory, which reflects an upward trend in price movement.