USD/CAD steadily moves back above 1.3700 mark, lacks follow-through buying

  • USD/CAD recovers early lost ground amid a modest USD recovery from the daily low.
  • Fears of a full-blown banking crisis drive some haven flows and benefit the Greenback.
  • An intraday move up in Oil prices could underpin the Loonie and cap any further gains.

The USD/CAD pair attracts some dip-buying near the 1.3680-1.3675 region on Friday and has now reversed a major part of its intraday losses. The pair climbs back above the 1.3700 round-figure mark during the mid-European session, though the intraday uptick lacks bullish conviction.

Crude Oil prices regain positive traction on the last day of the week and move away from a 15-month low touched on Thursday amid hopes for a strong recovery in Chinese fuel demand. This, in turn, is seen underpinning the commodity-linked Loonie and acting as a headwind for the USD/CAD pair amid a modest US Dollar weakness. Expectations that the Fed will adopt a less aggressive hawkish stance in the wake of worsening economic conditions weigh on the USD.

Last week's collapse of two mid-size US banks - Silicon Valley Bank and Signature Bank - forced investors to scale back bets for more aggressive policy tightening by the US central bank. In fact, the markets are now pricing in a greater chance of a smaller 25 bps lift-off at the upcoming FOMC monetary policy meeting on March 21-22. This is evident from a fresh leg down in the US Treasury bond yields and turns out to be a key factor exerting downward pressure on the buck.

That said, a generally weaker risk tone drives some haven flows towards the Greenback and assists the USD/CAD pair to reverse the early lost ground. Despite multi-billion-dollar lifelines for troubled banks in the US and Europe, investors remain worried about widespread contagion and the possibility of a full-blown global banking crisis. This, along with looming recession fears, takes its toll on the global risk sentiment and benefits traditional safe-haven currencies.

Furthermore, the fact that the Bank of Canada (BoC) became the first major central bank to pause its rate-hiking cycle last week could undermine the Canadian Dollar. This, in turn, suggests that the path of least resistance for the USD/CAD pair is to the upside and supports prospects for a move back towards reclaiming the 1.3800 mark. Traders now look to the release of the Michigan US Consumer Sentiment Index to grab short-term opportunities heading into the weekend.

Technical levels to watch


Today last price 1.3715
Today Daily Change -0.0007
Today Daily Change % -0.05
Today daily open 1.3722
Daily SMA20 1.3645
Daily SMA50 1.3492
Daily SMA100 1.3508
Daily SMA200 1.3335
Previous Daily High 1.3788
Previous Daily Low 1.3714
Previous Weekly High 1.3862
Previous Weekly Low 1.3582
Previous Monthly High 1.3666
Previous Monthly Low 1.3262
Daily Fibonacci 38.2% 1.3742
Daily Fibonacci 61.8% 1.376
Daily Pivot Point S1 1.3694
Daily Pivot Point S2 1.3667
Daily Pivot Point S3 1.362
Daily Pivot Point R1 1.3769
Daily Pivot Point R2 1.3815
Daily Pivot Point R3 1.3843



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