USD/CAD reached a new YTD high, meanders around 1.2889 post-US/Canada PMIs
- The USD/CAD edges higher on Monday, some 0.27%.
- The US central bank tightening at a faster pace, China’s Covid-19 spread, and Ukraine’s war weighed on the market mood.
- USD/CAD Price Forecast: Upward biased, though facing solid resistance at 1.2900.
USD/CAD rallies ahead of the FOMC meeting and is testing the 1.2900 mark, for the first time, since March 8, when the greenback reached the previous YTD high around 1.2901. At 1.2884, the USD/CAD gains 0.33%, though shy of the YTD high previously reached during the day at 1.2913.
Sentiment has not improved since early during the North American session, as Wall Street is set to finish the first day of May with losses. The greenback remains in the driver’s seat as shown by the US Dollar Index, rising 0.48%, sitting at 103.712, underpinned by skyrocketing US Treasury yields.
Factors like expectations of the Federal Reserve rate hike of 50-bps alongside China’s struggling to control the coronavirus outbreak threaten to slow the global economy. Shanghai, China’s recent Covid-19 epicenter, reported 58 new cases due to “relaxing” restrictions. Meantime, Beijing keeps intensifying its efforts and, on Labour day, tested millions of people, reacting faster than Shanghai’s authorities
Regarding geopolitics, fighting between Ukraine-Russian continues, though things remain “unchanged,” as peace talks have not resumed. At the same time, Russian President Vladimir Putin emphasized that the “special military operation” would keep going until they achieved their goals.
Macroeconomic-wise, the US docket featured the ISM Manufacturing PMI for April grew slower to 55.4, missed expectations of 57.6, and trailed March’s 57.1 readings. On the Canadian front, the S&P Global Manufacturing PMI expanded at a slower pace in April, as Ukraine’s war added to pressures on capacity and costs.
USD/CAD Price Forecast: Technical outlook
The USD/CAD is upward biased, as shown by the daily chart. The daily moving averages (DMAs) below the spot price, alongside the MACD indicator, trending higher with both lines, confirms the uptrend.
With that said, the USD/CAD’s first resistance would be 1.2900. A breach of the latter would expose December 20, 2021, a daily high at 1.2963, followed by 1.3000. On the other hand, the USD/CAD first support would be April’s 29 daily high-turned-support at 1.2860, followed by April’s 28 daily low at 1.2791, and then the 1.2700 figure.
Author
Christian Borjon Valencia
FXStreet
Christian Borjon began his career as a retail trader in 2010, mainly focused on technical analysis and strategies around it. He started as a swing trader, as he used to work in another industry unrelated to the financial markets.
