- The US dollar pulls back after being rejected at 1.2390.
- The pair remains flat ahead of key macroeconomic events later this week.
- USD/CAD might extend losses towards 1.2200 – MUFG.
The US dollar opened the week on a moderately positive tone, and extended its rebound from Friday’s low at 1.2335 to hit resistance again at 1.2385/90 area. The pair has retreated to 1.2360 afterward and remains practically flat on the day.
Sideways trading ahead of key macroeconomic data
The major currency crosses are trading within previous ranges on Monday, with the US dollar slightly firmer against its main rivals in a choppy trading session. Investors remain reluctant to place significant bets ahead of the release of US GDP data and the monetary policy decisions of the European Central Bank, Bank of Japan, and the Bank of Canada.
In absence of relevant macroeconomic releases today, persisting inflation concerns and a moderate pullback on US Treasury yields, are keeping US dollar bulls in check. The 10-year bond has ticked down to 1.63% on Monday from multi-month highs at 1.68% last week which is weighing on demand for the greenback.
Regarding the Canadian dollar, rising expectations that the Bank of Canada will be forced to start hiking rates ahead of schedule are supporting the CAD, which has appreciated more than 3% in the last five weeks. In this context, some market voices, anticipate that the BoC might start raising the tone of its message after this week’s meeting, which might give a fresh boost to the loonie.
USD/CAD: Scope to a slide to 1.22 –MUFG
From a technical perspective, the FX Analysis Team at MUFG observes the CAD supported by fundamentals, which could drive the pair towards 1.2200 in the near-term: “The Canadian rate market has moved sharply over the past month to price in both earlier BoC hikes and a larger hiking cycle. Weekly QE purchases are currently running at CAD2 B, and the BoC could announce plans to formally bring an end to QE this year. To reinforce upward momentum for the CAD, the BoC will also have to drop forward rate guidance (..)The next key support area comes in at around the 1.2200-level.”
Technical levels to watch
|Today last price||1.2374|
|Today Daily Change||0.0010|
|Today Daily Change %||0.08|
|Today daily open||1.2364|
|Previous Daily High||1.239|
|Previous Daily Low||1.2321|
|Previous Weekly High||1.241|
|Previous Weekly Low||1.2288|
|Previous Monthly High||1.2896|
|Previous Monthly Low||1.2494|
|Daily Fibonacci 38.2%||1.2347|
|Daily Fibonacci 61.8%||1.2364|
|Daily Pivot Point S1||1.2326|
|Daily Pivot Point S2||1.2289|
|Daily Pivot Point S3||1.2257|
|Daily Pivot Point R1||1.2395|
|Daily Pivot Point R2||1.2427|
|Daily Pivot Point R3||1.2464|
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.