USD/CAD Remains Little Changed But Faces Downward Pressure 

Insights

• The dollar remained little changed as investors await for Biden to impose new sanctions against Russia 
• U.S. Benchmark Treasury yields rose due to the Fed’s stance on rates and inflation
• Gold and silver prices rise as investors look to their safe-haven appeal to shield against inflation and Russia-Ukraine uncertainty
• Volatile oil prices jump as CPC pipeline disruption hurts Russian exports

The dollar faces downward pressure against the Loonie as rising oil prices will keep gains on the pair to a minimum. U.S. benchmark yields reach new highs in today’s session. The 10-year yield hit its highest level since May 2019 but retreated three basis points. Gold prices rose as its safe-haven appeal attracted investors. Oil prices spiked in volatile trading amid the CPC pipeline disruption, reducing Russian oil exports. The U.S. also is experiencing reduced oil stockpiles.

In February, U.S. new home sales declined for the second consecutive month, decreasing 2% to a seasonally adjusted rate of 772,000 units. Economists’ expectations were 805,0000. Despite that inventory is at its highest level since 2008, increasing mortgage rates and rising housing prices contribute to the decline. 

Technical Analysis

The USD/CAD recovered from its two-month low around the 1.25 region. However, rising oil prices will be a headwind for the exchange rate, strengthening the Loonie. USD/CAD crossed under the 200-day moving average, and the 100-day moving average crossed above the 50-day moving average. These technicals indicate a downward trend. Support is seen near the downward sloping trendline near 1.257, which the rate broke. Resistance is seen near the 200-day moving average near 1.260. Short-term momentum is negative as the fast stochastic had a crossover sell signal.

The medium-term momentum is negative as the MACD line generated 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 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.