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USD/CAD Price Prediction – USD/CAD Traded Lower Amid Rebound in Crude Oil and Equities

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Key Insights

  • Gold prices traded lower.

  • Treasury yields soared as investors piled into equities.

  • Oil prices rose as demand concerns outweigh supply issues.

USD/CAD moved lower as risk-on sentiment underpins the Loonie. The dollar sustains its upward trend as investors predict more aggressive Fed rate tightening. Benchmark yields rose as investors rotated into stocks and sold bonds. The ten-year yield soared by 9 basis points today.

Gold prices declined on a stronger dollar due to bets of more aggressive Fed rate tightening in the coming months. Oil prices increased on Friday after volatile trading this week.

However, oil prices slid this week due to concerns over China’s lockdowns and rising inflation. These factors offset supply concerns from the potential embargo on Russian oil.

The economic calendar remains light today. Fed Chair Powell’s comments about the state of the economy remain in focus. Economists bet on what the Fed’s next move will be at the June and July meetings.

However, the main concern is that inflation will still be elevated even if the economy slows down. The latest CPI data made clear that rising inflation is still a lingering concern. The market is pricing in 50-basis point rate hikes for June, July, and likely for September.

Technical Analysis

The USD/CAD trades below 1.30 today as rising oil prices and risk-on sentiment support the Loonie. However, the bearish trend in the currency pair appears to be short-term. The pair is having a bullish break out as aggressive Fed rate hikes boost the dollar. A break above the 1.30 mark will support a bullish outlook/

Resistance is seen near the horizontal trend line near 1.31. Support is seen near the 10-day moving average of 1.29. A pullback to the 10-day moving average is an opportunity for investors to buy the dip.

Short-term momentum is negative as the fast stochastic had a crossover sell signal. Medium-term momentum is positive as the MACD line generated a crossover buy 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 MA of the MACD line). The trajectory of the MACD is in positive territory, which reflects an upward trend in price movement.

This article was originally posted on FX Empire


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