Market participants will likely watch the USD/CAD very closely this week. This is because both central banks, the BOC and the Fed, will release their first policy decisions for 2022 on Wednesday, which can significantly impact the pair.
Central banks meetings in focus
The Fed is expected to take a more aggressive stance. In addition to anticipating hints of a March rate hike, some traders also believe the members will discuss unwinding the Fed's balance sheet in the near future.
On the other hand, the Bank of Canada is expected to increase the interest rate from 0.25% to 0.5%. The bank is also set to release its monetary policy report at the end of the meeting.
Generally speaking, a more hawkish than expected statement from the Fed has a bullish effect on USD/CAD, while a more aggressive stance from the BoC can strengthen the Canadian dollar, which is seen as a bearish sign for the pair.
Technical view
USD/CAD has been trading within an ascending triangle pattern since May 2021. After bouncing from the 200-Day simple moving average and the triangle support, bulls are attempting to hold above the 1.2617 support level and send the price towards the 50-Day SMA in line with the 1.2710 previous level of interest.
If positive momentum accelerates, buyers can overcome this hurdle and break through the 1.2763 resistance. As they become able to cross this barrier, they must clear 1.2839 first in order to reach the upper edge of the pattern at 1.2950.
On the flip side, if sellers take cues from 50-Day SMA resistance and retake control, the pair is likely to consolidate between moving averages for some time before taking a clear direction. However, a sustained move below 1.2447 would turn the sentiment to bearish, with sellers aiming for the 1.2288 handles around the October lows.
Momentum oscillators suggest that the bearish momentum is fading, but they have not yet confirmed the emerging bullish bias. The RSI is hovering in the neutral zone, while momentum is trending downward in the selling region. At the same time, the negative MACD bar is shrinking above its falling signal line.
The content of this material and/or any information provided should in no way be construed, expressly or by implication, directly or indirectly, as advice, recommendation, or suggestion of an investment strategy in relation to a financial instrument and is not intended to provide a sufficient basis for making investment decisions in any way. Any information, views or opinions presented in this material have been obtained or derived from sources believed to be reliable, but Errante makes no warranty as to their accuracy or completeness. Errante accepts no liability for losses arising from the use of this data and information. The data and information contained herein are for background purposes only and make no claim to be complete or comprehensive.
Recommended Content
Editors’ Picks
EUR/USD trades weak below 1.0800 amid Good Friday lull, ahead of US PCE
EUR/USD remains depressed below 1.0800 after soft French inflation data, amid minimal volatility and thin liquidity on Good Friday. The pair keenly awaits the US PCE inflation data and Fed Chair Powell's speech for fresh hints on next week's price action.
GBP/USD holds steady above 1.2600 as markets stay calm on Good Friday
GBP/USD trades sideways above 1.2600 amid a typical Good Friday trading lull. A broadly firmer US Dollar could keep any upside attempts limited in the pair ahead of the US PCE inflation data and Fed Chair Powell's appearance.
Gold price sits at all-time highs above $2,230, US PCE eyed
Gold price hit all-time highs at $2,236 on Thursday to finish Q1 2024 with a bang. Most major world markets, including the US are closed due to Holy Friday, leaving volatility around Gold price highly subdued. US PCE inflation and Powell are awaited.
Jito price could hit $6 as JTO coils up inside this bullish pattern
Jito (JTO) price has been on an uptrend since forming a local bottom in early January. Since then, JTO has revisited the key swing point formed in early December, suggesting the bulls’ intention to move higher.
Key events in developed markets next week
Next week, the main focus will be inflation and the labour market in the Eurozone. We expect services inflation to be impacted by the easter effect, while the unemployment rate to be unchanged.