• The relentless USD buying pushed USD/CAD to a fresh multi-week high on Thursday.
  • The disappointing release of the US GDP capped the upside for the USD and spot prices.
  • Softer crude oil prices, aggressive Fed rate hike bets support prospects for further gains.

The USD/CAD pair trimmed a part of its intraday gains during the early North American session and was last seen trading around the 1.2855-1.2860 region, just a few pips below the highest level since March 9.

The pair attracted fresh buying near the 1.2800 mark on Thursday and prolonged its recent strong rally witnessed over the past one week or so amid the relentless US dollar buying. Investors seem convinced that the Fed would adopt a more aggressive policy response to combat stubbornly high inflation and have been pricing in a 50 bps rate hike at the upcoming meeting on May 3-4.

The markets also expect the US central bank to continue tightening its monetary policy when it meets again in June and July and ultimately lift rates to around 3.0% by the end of the year. The USD, however, eased a bit from the five-year peak following the disappointing release of the US GDP report, which showed that the economy unexpectedly contracted by 1.4% during the first quarter.

That said, additional details revealed that the GDP Price Index accelerated to 8% in Q1 and reaffirmed the prospects of rapid Fed rate hikes. This, along with a fresh leg up in the US Treasury bond yields, acted as a tailwind for the buck. On the other hand, a softer tone around crude oil prices undermined the commodity-linked loonie and offered additional support to the USD/CAD pair.

This, in turn, favours intraday bulls and supports prospects for a move back towards testing the YTD high, around the 1.2900 mark touched in March. Some follow-through buying will mark a fresh bullish breakout and set the stage for a further near-term appreciating move for the USD/CAD pair. This, in turn, suggests that any meaningful pullback might still be seen as a buying opportunity.

Technical levels to watch

USD/CAD

Overview
Today last price 1.2853
Today Daily Change 0.0030
Today Daily Change % 0.23
Today daily open 1.2823
 
Trends
Daily SMA20 1.2608
Daily SMA50 1.2652
Daily SMA100 1.268
Daily SMA200 1.263
 
Levels
Previous Daily High 1.2854
Previous Daily Low 1.2778
Previous Weekly High 1.2726
Previous Weekly Low 1.2458
Previous Monthly High 1.2901
Previous Monthly Low 1.243
Daily Fibonacci 38.2% 1.2807
Daily Fibonacci 61.8% 1.2825
Daily Pivot Point S1 1.2782
Daily Pivot Point S2 1.2742
Daily Pivot Point S3 1.2706
Daily Pivot Point R1 1.2859
Daily Pivot Point R2 1.2894
Daily Pivot Point R3 1.2935

 

 

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