USD/CAD Price Prediction – USD/CAD Stabilizes Near Friday’s Close Despite Stronger Dollar and Yields 

Key Insights

• Gold prices recovered after volatile trading. 
• Treasury yields eased as investors await clues about the Fed’s next move. 
• Oil prices faced upward traction amid supply concerns over the Russian oil embargo.

USD/CAD remained little changed as the dollar continued to strengthen against most major currencies. The dollar moved higher nearing two-decade highs as investors long the dollar. Benchmark yields traded lower as investors await this week’s economic data. The ten-year yield declined by 3 basis points today. 

Gold prices whipsawed as investors develop greater bearish sentiment. A stronger dollar supports bearish gold prices.

Oil prices rose as European diplomats showed optimism regarding a potential Russian oil ban, which would reduce the oil supply. The prospect of the oil embargo offset concerns about demand due to the sustained lockdowns in China.

The Empire State Manufacturing Index came in lower than expected. Investors await this week’s economic data about retail sales for clues about the size of the Fed’s next move.

April housing starts will be reported on May 18th, which will signal how interest rate-sensitive sectors like the housing market are faring in tightening financial conditions. 

Economists predict that housing market activity will remain elevated despite a decline from the previous month. US companies with foreign earnings will also face a headwind from the dollar strengthening relative to other currencies, which will be evident in their earnings.

Technical Analysis

The USD/CAD held steady near the 1.289 level, but the pattern indicates that a top may be developing for the currency pair. A break below the 1.289 level will signal further downward pressure, putting the currency pair in the 1.27s region. 

Resistance is seen near the 10-day moving average of 1.291. Support is seen near the May 5th low near 1.27. 

Short-term momentum is 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 positive territory, which reflects an upward trend in price movement.