USD/CAD remains steady around the 1.3600 level as crude oil prices edge higher.
FUNDAMENTAL OVERVIEW:
- On Monday, USD/CAD strives to extend its recent gains.
- Federal Reserve official Bostic revised his forecast, anticipating only one interest rate cut in 2024 instead of the two previous cuts.
- The increased price of WTI could be a factor bolstering the Canadian Dollar.
USD/CAD remains positive after scaling back some advances on Monday. Trading around 1.3600 during the Asian session, the pair holds onto its upward trajectory, spurred by hawkish comments from Federal Reserve Bank of Atlanta President Raphael Bostic on Friday. Bostic, revising his earlier forecast of two interest rate cuts for the year, now anticipates only one, attributing it to sustained inflation and robust economic data.
Additionally, the Canadian Dollar (CAD) experienced downward pressure following indications from the Bank of Canada (BoC) suggesting potential rate cuts in 2024, as revealed in its recent meeting minutes. Deputy Governor Toni Gravelle reiterated the central bank’s plan for quantitative tightening to conclude by 2025, emphasizing its sustainability amid gradual reductions in interest rates.
Elevated crude oil prices boost the CAD, thereby mitigating the declines of the USD/CAD pair. Furthermore, the Canadian Dollar may have found additional support from stronger-than-expected Canadian Retail Sales data, further reinforcing its position.
Investors are expected to closely observe the unveiling of fourth-quarter 2023 Gross Domestic Product (GDP) figures from the United States (US). Furthermore, Canadian GDP data for January, slated for publication on Thursday, will also garner significant attention.
USD/CAD TECHNICAL ANALYSIS DAILY CHART:
Technical Overview:
USD/CAD is currently trading within an up channel.
USD/CAD is positioned above all Moving Averages (SMA).
The Relative Strength Index (RSI) is in the Buying zone, while the Stochastic oscillator suggests a Neutral trend.
Immediate Resistance level: 1.3613
Immediate support level: 1.3570
HOW TO TRADE USD/CAD
After a notable decline, USD/CAD found a support level and reversed its direction towards a significant resistance area. Presently, it encounters resistance at this crucial zone, suggesting a potential downward movement if USD/CAD fails to breach it.