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USD/CAD rises strongly on strong dollar and Credit Suisse-linked risk aversion

  • USD/CAD rose on deteriorating market sentiment as investors seeking safety bolstered the US dollar.
  • US Retail Sales were lower than expected, but prices paid by producers cooled.
  • USD/CAD Price Analysis: To resume its uptrend, buyers are targeting 1.3900.

He USD/CAD It is recovering thanks to safe-haven flows into the dollar sponsored by the problems of the financial crisis of the US banking that threaten to spread throughout the world. The bankruptcy of two banks in the US sparked a massive sale of Credit Suisse (CS) shares, amid growing fears of a financial crisis. Therefore, USD/CAD is trading at 1.3774 after hitting a low of 1.3659.

Sentiment turns negative, strengthening the US dollar

Investor sentiment continues to deteriorate, with global stocks trading lower. Wall Street continues to trade at a loss amid a possible Credit Suisse default, as more banks become less exposed to the latter. The CBOE Volatility Index (VIX), known as the fear index, spiked and reached the 30.00 level, portraying sour sentiment in financial markets.

Meanwhile, economic data from the United States (US) showed Retail Sales fell 0.4% MoM against estimates of a 0.3% contraction. Although the data is negative, the 3.2% rise in January and February data continue to show that Americans are spending at a slower pace. At the same time, the US Bureau of Labor Statistics revealed that prices paid by producers in February, also known as the Producer Price Index (PPI), fell 0.1% month-on-month, below expectations for expansion. of 0.3%. Core PPI was 0%, disappointing estimates for a 0.4% rise, showing signs that prices are headed lower amid the Fed’s aggressive 20220 tightening cycle.

Therefore, safe-haven flows boosted the US dollar (USD), and the Dollar Index advanced 1.13% to 104.836. However, US Treasury yields have been punished by investors, with the US 2-year and 10-year extending their losses, each down 37 basis points (bp) and 24 bp, respectively, to 3.889% and 3.453%.

On the Canadian side, housing starts in February topped estimates of 220,000, rising to 224,000 units from a revised 216,500 in January, according to the Canadian Mortgage and Housing Corporation (CMHC).

Therefore, USD/CAD would continue to be supported by market sentiment and flows to safety. In addition, the Bank of Canada’s pause on interest rate hikes would keep the dollar propped up by the interest rate differential. This means that the USD/CAD bias remains bullish.

USD/CAD Technical Analysis

The USD/CAD pair maintains its bullish bias, overcoming three consecutive days of losses. Although the pair tested the 20-day EMA at 1.3645, it jumped from that area and formed a bullish engulfing candlestick pattern. Oscillators remain in bullish territory, with the exception of the Exchange Rate (TCC), which shows that selling pressure is easing, about to cross above neutral.

In case of a bullish continuation, the first resistance of the USD/CAD would be 1.3814, today’s high. A break of the latter would expose the yearly high at 1.3862 before the pair approaches 1.3900. As an alternate scenario, a break of the 20-day EMA at 1.3645 would pave the way towards the 50-day EMA at 1.3550.


Last price today 1.3771
Today Change Daily 0.0086
today’s daily variation 0.63
today’s daily opening 1.3685
daily SMA20 1.3613
daily SMA50 1.3483
daily SMA100 1.3505
daily SMA200 1.3324
previous daily high 1,375
previous daily low 1.3652
Previous Weekly High 1.3862
previous weekly low 1.3582
Previous Monthly High 1.3666
Previous monthly minimum 1.3262
Fibonacci daily 38.2 1.3689
Fibonacci 61.8% daily 1.3713
Daily Pivot Point S1 1.3641
Daily Pivot Point S2 1.3597
Daily Pivot Point S3 1.3543
Daily Pivot Point R1 1,374
Daily Pivot Point R2 1.3794
Daily Pivot Point R3 1.3838

Source: Fx Street

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