Home Forex It is hovering near the daily low around 1.3470 on a subdued US dollar

It is hovering near the daily low around 1.3470 on a subdued US dollar

by SuperiorInvest


Share:

  • USD/CAD faces selling pressure as US dollar index retreats.
  • Fed policymakers continue to shy away from speculating on the timing of rate cuts.
  • The Canadian dollar will dance to the tune of employment data.

The USD/CAD the pair is trading near daily lows around 1.3470 in Wednesday’s European session as the US dollar index (DXY) corrected to near 104.00 from an 11-week high of 104.60. The USD Index did not maintain strength despite the fact that Federal Reserve (Fed) policymakers were not ready to speculate on rate cuts.

Market sentiment appears to be asset-specific as S&P500 futures are muted while investors support risk-averse currencies against American dollar.

Fed policymakers are uncomfortable bidding anytime the central bank starts cutting interest rates because they still need more confidence that inflation will sustainably return to the 2% target. Strength in the labor market and resilient consumer spending have dimmed the prospect of inflation returning to 2%.

The Canadian dollar, meanwhile, will be guided by January employment data due out on Friday. The Unemployment rate rose to 5.9% from 5.8% in December.

USD/CAD faces selling pressure as it attempts to break the Ascending Triangle formation on the four-hour time frame. The chart pattern above suggests a decline in volatility, but with a positive bias.

Horizontal resistance of the ascending triangle diagram the pattern is drawn from the January 17 high at 1.3542, while the uptrend line is placed from the December 29 low at 1.3178. The Loonie fell near the 20-period exponential moving average (EMA), which is trading around 1.3470.

The 14-period Relative Strength Index (RSI) has not held above 60.00, indicating lower buying power at higher levels.

A buying opportunity would arise if the Loonie breaks above the January 17 high at 1.3542, leading the asset to round resistance at 1.3600, followed by the November 30 high at 1.3627.

On the other hand, a break below the January 31 low of 1.3359 would expose the asset to the January 4 low of 1.3318 and the January 5 low of 1.3288.

USD/CAD 4 hour chart

Source Link

Related Posts