- USD/CAD gained traction for the third successive day and refreshed multi-week tops.
- Weaker crude oil prices undermined the loonie and acted as a tailwind for the major.
- The strong USD bullish sentiment supports prospects for a further appreciating move.
The USD/CAD pair maintained its bid tone near multi-week tops through the early European session, with bulls looking to build on the momentum beyond the 1.2600 mark.
The pair built on the previous day's bullish breakout momentum through a three-week-old ascending channel and gained some follow-through traction for the third successive day on Friday. A weaker tone around crude oil prices undermined the commodity-linked loonie and acted as a tailwind for the USD/CAD pair amid the prevalent strong bullish sentiment surrounding the US dollar.
In fact, the USD Index shot to 16-month tops earlier today amid expectations that the Fed would adopt a more aggressive policy response to contain stubbornly high inflationary pressures. The bets for an early policy tightening by the Fed increased further after data released on Wednesday showed that the US consumer prices in October rose at the fastest annual pace since 1990.
Meanwhile, the Fed funds futures indicate that the first-rate hike could come as soon as July 2022, which, in turn, remained supportive of elevated US Treasury bond yields. This, along with the cautious mood around the equity markets, continued underpinning the safe-haven greenback and pushed the USD/CAD pair to the highest level since October 6, validating the bullish breakout.
This comes on the back of acceptance above the very important 200-day SMA and supports prospects for an extension of this week's hotter-than-expected US CPI-inspired strong rally from sub-1.2400 levels. That said, overbought RSI (14) on hourly charts warrants some caution for aggressive bullish traders. Nevertheless, the USD/CAD pair remains on track to end the week on a positive note.
Investors now look forward to the US economic docket, highlighting the release of the Prelim Michigan Consumer Sentiment Index. Apart from this, the US bond yields and the broader market risk sentiment will influence the USD. Traders will further take cues from oil price dynamics to grab some short-term opportunities around the USD/CAD pair.
Technical levels to watch
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.