USD/CAD Tests Lower End of Range amid Russian Invasion

The dollar consolidated to 1.27 against the Canadian dollar as Russia expanded its invasion of Ukraine. US benchmark yields declined as the 10-year yield fell to 1.7%. Palladium prices rose 9% over concerns about a supply deficit. Oil prices rallied 11%. Investors look to safe-haven government bonds, driving up yields. Fed Chair Powell’s testimony might indicate policy action.

Technical Analysis

The USD/CAD stabilized against the Loonie. Support is seen near the 50-day moving average near 1.268. Resistance is seen near the 10-day moving average near 1.27. Short-term momentum is positive as the fast stochastic is generated a crossover buy signal. The reading prints 41.36. 

Medium-term momentum turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. The MACD line (the 12-day moving average minus the 26-day moving average) converges to the signal line (the 9-day moving average of the MACD line). The MACD histogram is printing in negative territory with a downward sloping trajectory.

Manufacturing PMI Indicates Economic Growth in February

The Manufacturing PMI, which measures the activity level of purchasing managers in the manufacturing sector, increased to 58.6%. The forecast was 57.5, and the previous reading was 55.5. The reading shows a consecutive expansion in the economy since May 2020. The New Orders Index registered 61.7%, increasing 3.8% points compared to a January reading of 57.9%.