#USDCAD @ 1.35460 has reached to near 1.3550 after volatile moves backed by Fed’s hawkish guidance. (Pivot Orderbook analysis)

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• USD/CAD has reached to near 1.3550 after volatile moves backed by Fed’s hawkish guidance.
• Fed’s terminal rate projection has escalated to 5.1% and it has promised a restrictive policy till inflation reached 2%.
• Oil prices could face volatility ahead as official US oil inventory data has reported a build-up of 10.231M barrels.

The pair currently trades last at 1.35460.

The previous day high was 1.3644 while the previous day low was 1.3522. The daily 38.2% Fib levels comes at 1.3569, expected to provide resistance. Similarly, the daily 61.8% fib level is at 1.3597, expected to provide resistance.

The USD/CAD pair has returned from where it started near 1.3550 after wild gyrations in the late New York session. The upside in the Loonie asset remained capped around 1.3610 while the downside got restricted near 1.3520. The Canadian Dollar major asset got severe hiccups after hawkish guidance by the Federal Reserve (Fed) chair Jerome Powell in its last monetary policy announcement of CY2023.

The market mood seems complicated for now as the US Dollar Index (DXY) is hovering near a fresh six-month low and the S&P500 settled with losses on Wednesday. It seems that the market participants need ample time to digest the hawkish guidance from the Fed as an interest rate hike by 50 basis points (bps) is in line with the expectations.

Demand for US Treasury bonds remained elevated as the concept of a smaller and slower interest rate hike is in place now. The 10-year US Treasury yields have dropped to near 3.47%.

An interest rate hike by 50 bps has pushed interest rates to 4.00-4.25% and Fed policymakers see the terminal rate at 5.1% by the end of CY2023. This indicates that there is still room for more rate hikes but the extent will remain smaller. Apart from the higher terminal rate, commentary that has escalated volatility in the global market is the promise of keeping policy restrictive till the inflation plummeted to 2%.

On the oil front, oil prices have extended their gains to near $77.50 in hopes of recovery in economic projections. A deceleration in the rate hike process might not haunt firms in executing expansion plans, which would accelerate oil demand in the near term. West Texas oil could see some volatility in the near term as official United States oil inventory data has reported a sheer increase in oil stockpiles by 10.231M for the week ending December 09. It is worth noting that Canada is a leading exporter of oil to the US and higher oil prices strengthen the Canadian Dollar.

Technical Levels: Supports and Resistances

USDCAD currently trading at 1.354 at the time of writing. Pair opened at 1.3557 and is trading with a change of -0.13 % .

The pair is trading above its 20 Daily moving average @ 1.3484, below its 50 Daily moving average @ 1.3566 , above its 100 Daily moving average @ 1.3345 and above its 200 Daily moving average @ 1.306

The previous day high was 1.3644 while the previous day low was 1.3522. The daily 38.2% Fib levels comes at 1.3569, expected to provide resistance. Similarly, the daily 61.8% fib level is at 1.3597, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 1.3505, 1.3452, 1.3382
• Pivot resistance is noted at 1.3627, 1.3697, 1.3749

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