USD/CAD Edges Higher Amid Stronger USD

Insights

  • The dollar saw gains against the Loonie after Fed rate hike

  • U.S. Benchmark Treasury yields slid amid unpromising Russia-Ukraine talks

  • Gold and silver slide as dollar strengthens against other currencies

  • Oil prices rally

The dollar inches up against the Loonie as the U.S. dollar strengthens following the Fed rate hike. U.S. Treasury yields dipped as investors monitor the slow-moving Russia-Ukraine talks. Gold prices slide as the U.S. dollar strengthens. Oil prices rally as supply shortages become a concern with Russian oil potentially shutting down.

Existing-home sales were below expectations in February, dropping 7.2% month to month. The seasonally adjusted annualized rate was 6.02 million units compared to the expectations of 6.13 million units. Rising mortgage rates contributed to the 2.4% lower sales from February 2021. The tight supply of homes was a significant factor in the drop in existing home sales. There was a 15.5% drop in the supply of homes year over year. There is the least supply on the lower-end price range of homes, increasing competition and prices.

Technical Analysis

The USD/CAD inches back up to mid-1.26 as the U.S. dollar strengthens, and there is greater USD demand. The exchange rate should move lower in the coming weeks as there will be CAD improvement in the coming weeks. The shortage of oil from the Russian shutdown in the coming weeks should lift the commodity-linked CAD. Resistance is seen near 1.265. Key support is seen near 1.257. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal.

The medium-term momentum is negative as the MACD line generated a crossover sell signal. This scenario happens when the MACD line (the 12-day moving average minus the 26-day moving average) crosses the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram prints positively. The trajectory of the MACD histogram is downward sloping, which likely points to downward prices.

This article was originally posted on FX Empire

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