- USD/CAD rises after five days in bearish numbers.
- Fed Chairman Powell approves 50bp rate hikes and it could happen not just once.
- USD/CAD Price Forecast: Broke 200 DMA, exposing USD/CAD to further downside pressure with 1.2500 as the next target.
The USD/CAD breaks five days of consecutive losses amid a mood of risk appetite in the market. At the same time, oil prices decline from around $115.00, weighing on the Loonie, as the dollar reflects the recent aggressive stance from Federal Reserve policymakers, led by Fed Chairman Powell. , which says there is a 50bp rise on the cards, aligned with Fed hawks Bullard, Bostic, Waller and Barkin. At time of writing, USD/CAD is trading at 1.2611.
Aggressive Fed Tone and US Treasury Yields Keep US Dollar Strong
Meanwhile, European and US equities continue to trade in the green, while the DXY retreated from daily highs near 99.00 around 98.481, up 0.01%. Meanwhile, US Treasury yields are rising on the day as market participants start to price in hikes from the US central bank. It is worth noting that the 5-year yield is trading at 2,380 % is higher than the 10-year Treasury yield at 2.368%, something USD/CAD traders should keep in mind.
The US economic docket featured more speeches from the Fed. James Bullard of the St. Louis Fed said the Fed needs to neutralize policy, saying “faster is better” and reiterated that rate hikes 50 basis points would be in the mix.
The Canadian economic docket featured the monthly Producer Price Index for February, which rose 3.1%, up from 2.5% in January, while commodity prices rose 29.8%, but down from the previous reading of 30.5%. .
USD/CAD Price Forecast: Technical Outlook
USD/CAD just crossed below the 200-day moving average (DMA) at 1.2607, in addition to the 50-DMA crossing below the 100-DMA, each located at 1.2681 and 1.2687, respectively. Furthermore, on March 18, the USD/CAD broke an ascending trend line, drawn from the end of January, support that once broken exposed the 200 DMA mentioned above.
That said, the USD/CAD bias is neutral to the downside. First support would be a six-month uptrend line around 1.2560-75. A break of the latter could pave the way for a further drop, with the Jan 19 daily low at 1.2450, followed by the Nov 10, 2021 cycle low at 1.2387.
To the upside, the first resistance would be the 200 DMA at 1.2607. Once broken, the next resistance would be 1.2650, followed by the confluence of the 50 and 100 DMA around 1.2681-87.
Technical levels
Source: Fx Street
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