- The loonie is holding firm against the greenback, with USD/CAD down 0.37% on the week.
- The Russia/Ukraine woes and the US central bank’s hawkish line couldn’t stop the CAD bulls from extending USD/CAD’s losses.
- USD/CAD Price Forecast: Downside Bias Once Exceeded 200 DMA.
The fall of USD/CAD extends to seven consecutive days amid a risk-off market mood in equity markets, which has failed to underpin currency markets, showing bullish sentiment, favoring commodity-driven currencies, while that safe haven peers are the stragglers of the day. At time of writing, USD/CAD is trading at 1.2557.
A dovish market sentiment keeps global equities under pressure while the dollar remains firm. The US Dollar Index, a gauge of the dollar’s value against a basket of six currencies, is up 0.22% to 98.639. The 10-year US Treasury yield falls from year-to-date highs, down two basis points to 2,348%.
Russia will receive rubles when selling oil and gas; boost the loonie
Russia: Ukraine’s problems are back in the spotlight, keeping investors on their toes. Ukrainian President Zelensky stated that talks with Russia are complex and sometimes contentious. On the Russian front, Foreign Minister Lavrov said NATO’s eastward expansion continues regardless of whether a particular nation is a member.
Russian President Vladimir Putin later said that they intended to use Russian rubles when selling gas to unfriendly countries, causing oil prices to spike, ultimately benefiting the Canadian dollar.
It’s worth noting that Canada’s oil and energy exports contribute just under 10% of its GDP.
Meanwhile, Western Texas Intermediate (WTI), the US crude oil benchmark, is up nearly 5% and trading at $114.06 per barrel per day, a USD/CAD headwind.
The US economic docket featured more Fed members. In a call with reporters, Loretta Mester, president of the Cleveland Fed, said the Fed would have to make some 50bp moves this year while favoring anticipated rate hikes to better position oneself on the evolution of the US economy in the second half of 2022. She further added that “I am not concerned that rate increases will push the US economy into recession.”
USD/CAD Price Forecast: Technical Outlook
USD/CAD is skewed to the downside once the pair broke below the 200-day moving average (DMA), trading at 1.2609. Since the March 3rd low at 1.2586 gave way to USD/CAD, sellers’ next target would be the yearly low at 1.2450. However, he would encounter some obstacles on the way south.
The first support of the USD/CAD would be 1.2550. The break of the latter would expose the daily low of September 3, 2021 at 1.2493, followed by the low of January 19 at 1.2450.
Additional technical levels
Source: Fx Street
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