The USD/CAD currency pair is reducing its earlier intraday advances, approaching the 1.3720 level, influenced by the prevailing risk-off sentiment in the market.
- USD/CAD extends gains as fears over the Middle East situation escalate.
- Fed Chair Powell’s dovish comments regarding the trajectory of interest rates created resistance for the US dollar.
- Solid US economic figures provide support to underpin the Greenback.
USD/CAD maintains its winning streak for the fourth straight day, with a trading value below 1.3720 in the European session on Friday. The pair is benefiting from upward momentum, driven by the ongoing risk-averse sentiment. This sentiment is likely linked to concerns about an escalation in the Middle East crisis, particularly amid preparations for a possible ground invasion of Gaza by Israel.
Federal Reserve Chairman Jerome Powell’s recent remarks exerted some influence on the USD/CAD pair. Powell conveyed that the central bank does not currently intend to increase interest rates, providing temporary relief for the pair. Nonetheless, Powell underscored that any forthcoming policy changes would be contingent on economic metrics, with a particular focus on growth and labor market conditions.
The release of less robust Canadian consumer inflation data earlier this week has prompted investors to reduce their anticipations of an additional interest rate increase by the Bank of Canada (BoC). Consequently, this development is perceived as a noteworthy factor influencing the Canadian Dollar’s (CAD) comparatively weaker performance, thereby lending support to the USD/CAD pair.
USD/CAD Technical Analysis Daily Chart:
Technical Overview
USD/CAD is currently trading within an up channel.
USD/CAD is positioned above the 20&50 Moving Averages (SMA).
The Relative Strength Index (RSI) is in the buying zone, while the Stochastic oscillator suggests a negative trend.
Immediate Resistance level: 1.3697
Immediate support level: 1.3631
How To Trade USD/CAD
After a significant ascent, the USD/CAD rate retraced to the 61.8% Fibonacci zone before resuming its trade. Currently, the price is in the process of establishing a pattern of higher highs and is trading in proximity to a resistance zone. Should this zone be breached, it could open the door for further upward movement.
TRADE SUGGESTION- STOP BUY – 1.3720, TAKE PROFIT AT- 1.3787, SL AT- 1.3684.