USD/CAD Remains in Pre-Weekend Range amid Easing Geopolitical Tensions

Insights

• The dollar consolidates near pre-weekend range against the Loonie
• U.S. yields surged higher, with the 10-year hitting high since July 2019
• Risk assets rebounded despite the uncertain geopolitical backdrop
• Commodity prices like oil fell and can result in economic damage

The dollar remained little changed against the Loonie. US treasury yields continue to break out due to expectations that the Fed will kick off the rate hike. Geopolitical pressures remain but are reduced, causing gold prices to fall. US stocks rose as oil prices tumbled. The Federal Reserve is expected to raise interest rates by 25 basis points at its two-day FOMC meeting this week. 

The New York Fed released its survey of consumer expectations for February. The survey is based on a rotating panel of 1,3000 households. Consumers expected to increase their spending by 6.4% in one year. This number jumped from 5.5% from January. Consumers expectations for inflation rose to 6.0% from 5.8% in January. Consumers had overall greater optimism about the labor market.

Technical Analysis

The USD/CAD remains rangebound. Support near the 10-day moving average that comes in near $1.275. Resistance on the currency pair is seen near 1.2901. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal.

The 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 moving average of the MACD line). The MACD histogram prints positively. The trajectory of the MACD histogram is downward sloping, which likely points to downward prices.