USD/CAD snaps two-day uptrend near 1.3700 as Oil grinds higher, US dollar drops on Fed’s dovish hike

USD/CAD bears return to the table, after a two-day absence, as broad US Dollar weakness joins the Oil price run-up during early Thursday. With this, the Loonie pair renews its intraday low near 1.3700 during the sluggish Asian session.

That said, the US Dollar Index (DXY) drops for the sixth consecutive day as bears poke the 102.30 mark while staying around the lowest levels since early February, marked the previous day. In doing so, the greenback’s gauge versus six major currencies fails to cheer the Federal Reserve’s (Fed) 25 basis points (bps) rate hike amid dovish concerns surrounding the US central bank’s next move, as well as fears surrounding the US banking sector.

Fed matched the market’s expectations of announcing a 0.25% rate hike but the statements saying, “some additional policy firming may be appropriate,” instead of previous remarks like “ongoing increases in the target range will be appropriate” pushed back the policy hawks.

It should be noted that Fed Chair Jerome Powell and US Treasury Secretary Janet Yellen’s comments were more important as Fed’s Powell said that officials do not see rate cuts for this year, which in turn allowed breathing space to the greenback bears in the last. On the other hand, US Treasury Secretary Janet Yellen ruled out considering “blanket insurance” for bank deposits. Recently, Bloomberg also came out with the news suggesting that the Federal Deposit Insurance Corporation is said to delay the bid deadline for a Silicon Valley private bank.

Elsewhere, WTI crude oil rises for the fourth consecutive day while extending the early-week rebound from the lowest levels since December 2021, up 0.52% intraday near $70.30 by the press time. In doing so, the black gold cheers hopes of more energy demand, driven by optimism surrounding China, while ignoring a surprise build in weekly inventories. That said, the weekly Crude Oil inventory data from the US Energy Information Administration (EIA) signaled that the stockpile grew 1.117M versus expected prints of -1.448M and 1.55M prior.

Against this backdrop, the US 10-year and two-year Treasury bond yields stay pressured around 3.48% and 3.96% at the latest while the S&P 500 Futures print mild gains even after Wall Street’s downbeat performance.

Looking ahead, second-tier numbers from the US and Canada can entertain USD/CAD pair traders ahead of Friday’s key Canadian Retail Sales and the US Durable Goods Orders for January and February respectively.

Technical analysis

USD/CAD stays on the bear’s radar unless providing a daily close beyond the 1.3720-30 resistance confluence, comprising the 10-DMA and a two-week-old descending trend line.