USD/CAD Price Prediction – USD/CAD trades flat despite easing dollar

Key Insights

• Gold prices traded flat as dollar fell.
• Treasury yields continue to slide amid risk-off sentiment.
• Oil prices stabilized despite likelihood of Russian embargo deal.

USD/CAD stabilizes in volatile trading despite weak US data and improving global market sentiment. Gold prices remained little changed but were headed for their first weekly gain since mid-April.

The dollar faced downward pressure amid weak US data as it is headed for its worst week since mid-February. 

Benchmark yields moved lower amid greater risk-off market sentiment. The ten-year yield lowered by 2 basis points today. Stocks faced declines amid investors’ worries over a potential economic recession.

Oil prices stabilized due to the easing of restrictions of Chinese lockdowns offsetting supply concerns from the EU embargo on Russian oil where the deal is getting closer. 

The economic calendar was light on Friday. However, investors’ fears grew about slowing economic growth and recession. Inflation concerns weighed on earnings this week. High prices are deterring consumer spending and leading to slower growth. 

The softening dollar and increasing gold prices signal investors’ fears about the direction of the market. The dollar was lifted amid geopolitical uncertainty as a haven, but treasury yields adjusting for inflation led to dollar weakness.

Technical Analysis

The USD/CAD holds in the 1.28 region after falling below that region earlier in the trading session. A combination of improved global risk appetite, weak US economic data, and strong Canadian data has weighed heavily on the currency pair.

However, a more aggressive Fed should boost yields and further support greater upside for the currency pair.

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 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.