USD/CAD Price Prediction – USD/CAD Trades Above 1.30 as the dollar holds firm and oil prices fall

Key Insights

• Gold prices hold steady as the dollar declined slightly. 
• Treasury yields pulled back due to concerns over inflation and slower growth.
• Oil prices plummet amid demand concerns in China and weaker economic growth.

USD/CAD sustains its upward trajectory, hitting a high of 1.30 for the first time since November 2020. The dollar slightly fell against other major currencies.

Benchmark yields dropped today as the Fed was less aggressive than the market priced in. The ten-year yield dipped below 3% today after being up 23 basis points yesterday. 

Gold prices became firmer as the dollar edged lower. Investors purchased gold ahead of US inflation data that could impact the Fed’s monetary policy. Oil prices continue to face downward pressure amid China’s lockdowns.

A stronger dollar also makes oil more expensive to investors in other currencies. The embargo on Russian oil has been delayed as Eastern European members have asked for exemptions and concessions.

The NFIB Small Business Economic Trends came in at 93.2, which was the same as the previous month. This reading, which indicates US small business confidence, was below the 48-year average of 98. Small businesses struggle to deal with mounting inflation pressures. Rising labor costs and a labor shortage increase their economic struggles.

Inflation data that will be released on Wednesday will likely impact the Fed policy decision at the next meeting.

Technical Analysis

The USD/CAD sustains positive momentum and continues to extend gains. The pair is having a bullish breakout, hitting the key level of 1.30.

Resistance is seen near the horizontal trend line near 1.30. Support is seen near the 10-day moving average of 1.287. A pullback to the 10-day moving average is an opportunity for investors to buy the dip.

Short-term momentum turns negative as the fast stochastic might have a crossover sell 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). The trajectory of the MACD is in positive territory, which reflects an upward trend in price movement.