USD/CAD Tests Resistance At 1.2625
- Treasury yields moved to new highs but failed to provide enough support to the U.S. dollar.
- However, USD/CAD gained ground as WTI oil pulled back from recent highs, which was bearish for commodity-related currencies.
- A move above 1.2625 will push USD/CAD towards the resistance at 1.2650.
U.S. Dollar Is Gaining Some Ground Against Canadian Dollar
USD/CAD is currently trying to settle back above 1.2625, while the U.S. dollar is mostly flat against a broad basket of currencies.
The U.S. Dollar Index has recently made an attempt to settle below the support level at 98.35 but failed to develop sufficient downside momentum. In case the U.S. Dollar Index declines below this level, it will move towards the 20 EMA at 98, which will be bearish for USD/CAD.
Today, foreign exchange market traders had a chance to take a look at Producer Prices report from Canada. The report indicated that Producer Prices increased by 3.1% month-over-month in February, compared to analyst forecast which called for growth of 2.1%. On a year-over-year basis, Producer Prices grew by 16.4%.
Traders also monitored the developments in U.S. government bond markets as Treasury yields tested new highs after hawkish comments from Fed Chair Jerome Powell.
Interestingly, higher yields did not provide enough support to the American currency as demand for safe-haven assets declined. At the same time, the Canadian dollar found itself under some pressure as WTI oil pulled back below the $110 level.
USD to CAD is testing the resistance level at 1.2625. In case USD to CAD manages to settle above this level, it will move towards the resistance at 1.2650.
A move above the resistance level at 1.2650 will open the way to the test of the next resistance at 1.2680. If USD to CAD climbs above this level, it will test the next resistance level, which is located at the 20 EMA at 1.2690.
On the support side, the nearest support level for USD to CAD is located at 1.2590. A successful test of this level will open the way to the test of the support at 1.2550.
In case USD to CAD manages to settle below this level, it will move towards the support at 1.2525. A move below 1.2525 will push USD to CAD towards the support at 1.2500.
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