#USDCAD @ 1.29445 -imp levels: dropped 0.15% on Thursday as market players prepare for further hawkish rhetoric by the Fed.

…
This is a premium post.
[s2If !current_user_can(access_s2member_level4)]Please register for PREMIUM VERSION HERE and login below to read further [lwa][/s2If] [s2If current_user_can(access_s2member_level4)]

• USD/CAD dropped 0.15% on Thursday as market players prepare for further hawkish rhetoric by the Fed.
• US GDP Q2 figure, albeit better than expected, is still in recessionary territory.
• USD/CAD Price Analysis: Traders reclaiming 1.3000 to open the door for YTD high tests; otherwise, a fall towards 1.2800 is feasible.

The pair currently trades last at 1.29445.

The previous day high was 1.3019 while the previous day low was 1.2944. The daily 38.2% Fib levels comes at 1.299, expected to provide resistance. Similarly, the daily 61.8% fib level is at 1.2973, expected to provide resistance.

The USD/CAD slides towards new weekly lows in the North American session amidst a positive market mood, spurred by China’s 1 trillion CNY stimulus, aimed to fix the housing and construction crisis. Meanwhile, traders prepare for Fed Chair Jerome Powell’s Jackson Hole speech on Friday.

The USD/CAD hit a daily high of around 1.2975, before diving, towards its daily low, around 1.2895, while crude oil prices edged higher. However, it bounced off the lows, above the 1.2900 psychological figure. At the time of writing, the USD/CAD is trading at 1.2947, down 0.15%.

The USD/CAD slid on broad US dollar weakness. The US Dollar Index, a gauge of the buck’s value vs. a basket of peers, loses 0.18%, down at 108.405, courtesy of market participants moving to the sidelines or profit taking before Powell’s speech. In the meantime, US Treasury bond yields receded from weekly highs, particularly the 10-year T-note rate down one bps, at 3.095%.

Growth in the US, as measured by the Gross Domestic Product (GDP) for the second quarter of 2022, on its second reading, beat expectations. Still, flashes recessionary signs at -0.6%, higher than 0.8% estimates.

At the same time, Initial Jobless Claims for the week ending on August 20 came lower than estimates, at 243K, vs. 253K expected by market analysts. The fall in unemployment claims continued showing a robust labor market, further fueling expectations of a 75 bps Federal Reserve rate hike.

In the meantime, Fed officials led by Kansas City Fed Esther George said that the US central bank would hold rates above 4%, and want to see a full quarter of consistent inflation data to know where things are going.

Earlier, Atlanta’s Fed Raphael Bostic said he’s undecided to go 50 or 75 bps and emphasized that expectations of a Fed pivot are “misguided.” Echoing his comments was Philadelphia’s Fed Patrick Harker, who said that he likes to see the Federal funds rate (FFR) at 3.4%, and then perhaps stay for a while there. He supports a 50 bps increase but wants to see the next inflation report.

With Jerome Powell’s speech at Jackson Hole, an absent Canadian docket will leave traders leaning on US dollar dynamics. Still, earlier, US inflation figures, namely the PCE Price Index and core PCE, would shed some light, as it’s the Fed’s favorite gauge of inflation.

The USD/CAD exchanges hands nearby the 50-day EMA, at around 1.2912, even though it reached a daily low of 1.2864. From a daily chart perspective, the USD/CAD remains tilted upwards, despite the Relative Strength Index (RSI) aiming down towards the 50-midline, signaling selling pressure gathering momentum. However, if the RSI breaks the midline, expect some downward pressure, putting into play the 50 and 20-day EMAs, each at 1.2912 and 1.2883, respectively. On the other side, if the USD/CAD breaks above 1.3000, a retest of the YTD highs is on the cards.

Technical Levels: Supports and Resistances

USDCAD currently trading at 1.2947 at the time of writing. Pair opened at 1.2968 and is trading with a change of -0.22 % .

The pair remains strongly bullish on the daily timeframe. It trades above its 20 SMA @ 1.2881, 50 SMA 1.2917, 100 SMA @ 1.2834 and 200 SMA @ 1.2763.

The previous day high was 1.3019 while the previous day low was 1.2944. The daily 38.2% Fib levels comes at 1.299, expected to provide resistance. Similarly, the daily 61.8% fib level is at 1.2973, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 1.2935, 1.2902, 1.2861
• Pivot resistance is noted at 1.301, 1.3052, 1.3085

[/s2If]
Join Our Telegram Group