USD/CAD Retreats After Fed Chair Powell’s Comments
U.S. Dollar Is Under Pressure Against Canadian Dollar
USD/CAD is trying to get to the test of the support level at 1.2590 while U.S. dollar is losing ground against a broad basket of currencies.
The U.S. Dollar Index has recently gained downside momentum and declined below the support level at 95.75. Currently, it is trying to settle below the 50 EMA at 95.65. In case the U.S. Dollar Index manages to settle below this level, it will move towards the next support at 95.40 which will be bearish for USD/CAD.
Today, foreign exchange market traders focused on Fed Chair Jerome Powell testimony. Powell highlighted the risks posed by inflation and said that if the Fed had to raise rates more over time, it would do so.
The U.S. dollar found itself under pressure after Powell’s comments as markets expected that he would be more hawkish. The yield of 2-year Treasuries declined after Powell’s words.
Foreign exchange market traders also focused on the developments in commodity markets as WTI oil moved above the $80 level and made an attempt to settle above $81. In case this attempt is successful, WTI oil will move towards the resistance at $81.80 which will be bullish for commodity-related currencies, including Canadian dollar.
USD to CAD is moving towards the support level at 1.2590. In case USD to CAD declines below this level, it will head towards the next support which is located at 1.2550.
RSI remains in the moderate territory, so there is enough room to gain additional downside momentum in case the right catalysts emerge. If USD to CAD declines below 1.2550, it will head towards the next support level at 1.2530.
On the upside, the previous support at 1.2625 will serve as the first resistance level for USD to CAD. If USD to CAD gets back above this level, it will move towards the resistance at 1.2650.
A move above 1.2650 will push USD to CAD towards the resistance at 1.2680. If USD to CAD climbs above this level, it will head towards the 50 EMA at 1.2710.
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