The USDCAD currency pair has surged 1.50% year-to-date, driven by a formidable three-week rally, poised for a potential fourth.
The Greenback’s resilience takes centre stage, following tempered expectations of an imminent rate cut in March and prompting a significant shift in market sentiment. The probability of a rate cut has dwindled from 77% to 50% within two weeks, bolstering the Greenback’s strength.
This ascent is underpinned by encouraging economic metrics in the U.S., where December’s inflation rose to 3.4% from 3.1% the previous month. Retail sales and consumer sentiment improvements further contribute to the Greenback’s momentum. As the week unfolds, attention turns to the Bank of Canada’s rate decision and the pivotal PCE Price Index, offering insights into potential shifts in U.S. monetary policy and shaping the trajectory of the USDCAD pair in the coming days.
Technical
Following a downtrend, the USDCAD currency pair staged a compelling rebound. Initially, the downtrend was characterized by the pair trading below the 100-day moving average, with the 1.36186 level serving as a formidable resistance point.
However, a pivotal reversal unfolded at 1.31773, marked by bullish momentum amid oversold RSI conditions. This sparked a breakthrough above the 100-day moving average and key Fibonacci Retracement levels, signalling a decisive shift to an uptrend.
The prevalence of bullish momentum suggests the potential retest of the 1.36186 resistance level if buyer enthusiasm persists. Conversely, attention may turn to the 50% Fibonacci Retracement level as a downside point of interest should selling pressures gain prominence.
Summary
The USDCAD showcases resilience with a 1.50% YTD surge, propelled by the Greenback’s strength amid diminishing rate-cut expectations. Positive economic metrics, including a 3.4% inflation rate, contribute to the upside momentum. As the Bank of Canada’s rate decision looms, key technical levels, notably the 1.36186 resistance and 50% Fibonacci Retracement, serve as potential points of interest.
Sources: U.S. Bureau of Labor Statistics, CME, Reuters, TradingView
Piece Written By Nkosilathi Dube, Trive Financial Market Analyst
Disclaimer: Trive South Africa (Pty) Ltd (hereinafter referred to as “Trive SA”), with registration number 2005/011130/07, is an authorised Financial Services Provider in terms of the Financial Advisory and Intermediary Services Act, 37 of 2002. Trive SA is authorised and regulated by the South African Financial Sector Conduct Authority (FSCA) and holds FSP number 27231. Trive Financial Services Ltd (hereinafter referred to as “Trive MU”) holds an Investment Dealer (Full-Service Dealer, excluding Underwriting) Licence with licence number GB21026295 pursuant to section 29 of the Securities Act 2005, Rule 4 of the Securities Rules 2007, and the Financial Services Rules 2008. Trive MU is authorized and regulated by the Mauritius Financial Services Commission (FSC) and holds Global Business Licence number GB21026295 under Section 72(6) of the Financial Services Act. Trive SA and Trive MU are collectively known and referred to as “Trive Africa”.
Market and economic conditions are subject to sudden change which may have a material impact on the outcome of financial instruments and may not be suitable for all investors. Trive Africa and its employees assume no liability for any loss or damage (direct, indirect, consequential, or inconsequential) that may be suffered. Please consider the risks involved before you trade or invest. All trades on the Trive Africa platform are subject to the legal terms and conditions to which you agree to be bound. Brand Logos are owned by the respective companies and not by Trive Africa. The use of a company’s brand logo does not represent an endorsement of Trive Africa by the company, nor an endorsement of the company by Trive Africa, nor does it necessarily imply any contractual relationship. Images are for illustrative purposes only and past performance is not necessarily an indication of future performance. No services are offered to stateless persons, persons under the age of 18 years, persons and/or residents of sanctioned countries or any other jurisdiction where the distribution of leveraged instruments is prohibited, and citizens of any state or country where it may be against the law of that country to trade with a South African and/or Mauritius based company and/or where the services are not made available by Trive Africa to hold an account with us. In any case, above all, it is your responsibility to avoid contravening any legislation in the country from where you are at the time.
CFDs and other margin products are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how these products work and whether you can afford to take the high risk of losing your money. Professional clients can lose more than they deposit. See our full Risk Disclosure and Terms of Business for further details. Some or all of the services and products are not offered to citizens or residents of certain jurisdictions where international sanctions or local regulatory requirements restrict or prohibit them.
