USD/CAD Remains Rangebound Despite the US Dollar Softening

The dollar remains steady against the Canadian dollar, as seen for most of February. Plans for a possible Biden-Putin meeting over the Ukraine crisis take shape, creating risk appetites in the FX markets. The US stock and bond markets are closed today. Gold prices dipped near $1890, pulling back from $1908, their highest price since June. The US dollar is offered against most currencies today, as Russia-Ukraine tensions remain in focus for risk sentiment. The market has pulled back the Fed’s chance of a 50bp hike in March from 65% last week to less than 25% today. The market priced in a 50% chance of a 175-basis point instead of a 150-basis point hike; however, now the market is pricing in a below 150-basis point hike.

Technical Analysis

The USD/CAD remains in a range against the Loonie. Resistance is seen near a downward-sloping trend line near 1.28. Support is seen near the 50-day moving average near 1.27. Short-term momentum is positive as the fast stochastic generates a crossover buy signal, but momentum decelerates. The reading prints 71.91, above the overbought trigger level of 70. Medium-term momentum is positive as the MACD (moving average convergence divergence) index generates a crossover buy signal, but momentum decelerates. This scenario occurs as the MACD line (the 12-day moving average minus the 26-day moving average) converges to the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram is printing in positive territory with an upward sloping trajectory.

Possible plan for Biden-Putin Talk Generates Price Action

US President Joe Biden and Russian President Vladimir Putin agreed to hold a summit on the Ukraine crisis if Russia does not invade Ukraine. Recent satellite images revealed deployments of Russian armor close to Ukraine, further increasing tensions. Several markets would face the effects of an invasion, from wheat and energy prices, the region’s sovereign dollar bonds, gold and other safe-haven assets, and stock markets.