- The US Dollar sell-off extends despite US inflation rising above 7%.
- Market participants expect the Fed’s first interest rate increase by March 2022.
- USD/CAD Technical Outlook: Bearish biased but a daily close below the 200-DMA might keep CAD bulls in charge.
During the North American session, the US dollar sell-off continued after US consumer inflation data released on Wednesday showed that CPI rose by 7.0%. Traders would expect that the US dollar may get stronger on it, as it further cements down the Fed’s first rate hike by March 2022, but per the market reaction, it appears it is already priced in. At the time of writing, the USD/CAD slides to fresh YTD lows, trading at 1.2461, a level last seen in November of the last year.
In the meantime, Light Crude oil Futures, advance 0.07%, sit at $82.70 per barrel, a tailwind for the oil-linked-currency Canadian dollar.
US Initial Jobless Claims climb, PPI edges lower than estimates
in the meantime, the US Department of Labour reported that Initial Jobless Claims for the week ending on January 7 increased by 230K, more than the 200K. At the same time, prices paid by producers, better known as the Producer Price Index for December on an annual basis, rose by 9.7%, a tenth lower than expected, showing that price pressures might get under control.
Earlier, the Philadelphia Fed President Patrick Harker said that he expected three rate hikes, followed by a reduction of its $8,7 Trillion balance sheet, coinciding with Fed’s Bostic, Mester, Daily, and other policymakers have said in the week.
Later in the day, Fed Vice-Chairwoman nominee Lael Brainard would hit the wires. The prepared remarks for her appearance at the US Senate are here.
USD/CAD Price Forecast: Technical outlook
The loonie strengthened against the greenback in the overnight session, extending the USD/CAD slump below the 200-day moving average (DMA), which lies at 1.2500. Hence, the USD/CAD is downward biased, per technical analysis. However, a daily close under the 200-DMA would add downward pressure on the pair.
The USD/CAD first support would be 1.2400. A breach of the latter would keep CAD buyers hopeful of extending towards October 21 of the last year, daily low at 1.2288, but first will need to break below November 10 cycle low at 1.2386, followed by the 1.2300 figure.
Contrarily, the pair’s first resistance would be the 200-DMA at 1.2500. A break above it would expose the January 12 daily high at 1.2580, followed by 1.2600 and then the 100-DMA at 1.2623.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
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.