USD / CAD falls below 1.2800 amid bullish market

  • The US dollar is under strong selling pressure, down around 0.55% against the Canadian dollar.
  • The Fed’s monetary policy decision was seen as a “buy the rumor, sell the fact” event, as evidenced by US stock indices at record highs.
  • USD / CAD technical outlook: A double top is looming on the daily chart, targeting 1.2400.

After a rise to 1.2937 on Wednesday, USD / CAD is moving lower during the American session on Thursday, trading at 1.2780 at the time of writing. Market sentiment has improved, as shown by the rise in European equities, while equity indices are moving positive in the United States.

On Wednesday, the Federal Reserve released its monetary policy decision, where the authorities decided to increase the speed of the reduction of the purchase of bonds, pointing to March 2022 as the end of the stimulus due to coronavirus. In addition, he released the “dot chart,” a part of his Summary of Economic Projections, which shows that the median of monetary policymakers expect at least three rate hikes in 2022, in line with the expectations of market participants.

That said, the Federal Reserve’s monetary policy decision turned into a “buy the rumor, sell the fact,” with equities rebounding to all-time highs after the Fed. At the same time, risk-sensitive currencies like the GBP , the CAD, the AUD and the NZD were up against the USD.

Meanwhile, the Western Texas Intermediate WTI is up 1.60% on the day, trading at $ 72.85, a tailwind for the Canadian dollar., currency linked to oil prices.

The 10-year US Treasury yield is down nearly three basis points, standing at 1,433%, a headwind for the US dollar, with the DXY dollar index falling 0.42%, currently at 96.10.

On the American economic calendar, initial jobless claims for the week ending December 11, they increased to 206,000, more than the 200,000 forecast. .

In addition, home starts in the United States rose 11.8% annually, while building permits increased 3.6%.

USD / CAD Technical perspective

Wednesday’s bullish move in USD / CAD faced stiff resistance at the August 20 high at 1.2948, then retraced the move to close below the December 3 high at 1.2853. That said, as shown on the daily chart, it did form a double top chart pattern with bearish implications.

However, to confirm its validity it would need a sustained break below 1.2605, which will point to a move towards the October 23 high of 1.2400.

USD / CAD technical levels

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