USD/CAD falls sharply to 1.3800 despite multiple tailwinds


  • USD/CAD slumps to 1.3800 even though the US Dollar exhibits strength.
  • Investors see the BoC choosing the June meeting as their earliest point for pivoting to rate cuts.
  • Oil prices weaken as Fed Powell’s hawkish guidance raises doubts over global economic outlook.

The USD/CAD pair dipped to round-level support of 1.3800 in Wednesday’s early American session. The Loonie asset faces pressure despite multiple tailwinds, such as higher Bank of Canada (BoC) rate cut hopes, a sharp decline in the Oil price, and hawkish guidance from Federal Reserve (Fed) Chair Jerome Powell.

The S&P 500 opens on a positive note, suggesting an improvement in the risk appetite of the market participants. 10-year US Treasury yields edge down to 4.64% but are still close to a five-month high as Fed Powell supported the argument of keeping interest rates higher for a longer period.

Meanwhile, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, turns sideways above 106.00.

Traders are pricing in a rate cut by the BoC in the June meeting as inflation remains on course towards the required rate of 2%. The BoC’s preferred inflation measure, the Core Consumer Price Index (CPI), which excludes eight volatile items, softened to 2.0% from the prior reading of 2.1%.

Last week, BoC Governor Tiff Macklem acknowledged that a rate cut in June is possible if inflation continues to decelerate sustainably after keeping interest rates unchanged at 5%.

Meanwhile, West Texas Intermediate (WTI), futures on NYMEX, have dropped to $84.00 as the dismal global economic outlook outweighs tight supply fears. Higher prospects for the Fed maintaining the monetary policy framework for a longer period weigh on the Oil price. Investors fear the global oil supply remaining tight amid deepening Middle East tensions.

USD/CAD

Overview
Today last price 1.3791
Today Daily Change -0.0038
Today Daily Change % -0.27
Today daily open 1.3829
 
Trends
Daily SMA20 1.3607
Daily SMA50 1.3551
Daily SMA100 1.3488
Daily SMA200 1.352
 
Levels
Previous Daily High 1.3846
Previous Daily Low 1.3774
Previous Weekly High 1.3787
Previous Weekly Low 1.3547
Previous Monthly High 1.3614
Previous Monthly Low 1.342
Daily Fibonacci 38.2% 1.3819
Daily Fibonacci 61.8% 1.3802
Daily Pivot Point S1 1.3787
Daily Pivot Point S2 1.3744
Daily Pivot Point S3 1.3715
Daily Pivot Point R1 1.3859
Daily Pivot Point R2 1.3888
Daily Pivot Point R3 1.3931

 

 

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