#USDCAD @ 1.37617 has printed a fresh (Pivot Orderbook analysis)

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• USD/CAD has printed a fresh
• four-month high at 1.3774 as the risk-aversion theme has strengthened further.
• Federal Reserve Powell has confirmed that the risk of persistent inflation is real and a higher terminal rate is expected than prior.
• Bank of Canada might keep interest rates steady as announced earlier.
• USD/CAD is running higher with sheer momentum considering the bullish message from indicators and oscillators.

The pair currently trades last at 1.37617.

The previous day high was 1.3761 while the previous day low was 1.36. The daily 38.2% Fib levels comes at 1.37, expected to provide support. Similarly, the daily 61.8% fib level is at 1.3661, expected to provide support.

USD/CAD has printed a fresh four-month high at 1.3774 in the Asian session. The Loonie asset witnessed a stellar buying interest after extremely hawkish remarks by Federal Reserve (Fed) chair Jerome Powell on Tuesday. The major has continued its upside journey as the impact of Federal Reserve Powell’s hawkish remarks has not been fully discounted yet.

S&P500 futures have retreated after an extremely weak recovery in the Asian session, portraying a healthy risk-off mood as the recovery movement has been capitalized by the market participants for making fresh shorts. The US Dollar Index (DXY) has refreshed its three-month high above 105.80 and is gathering strength for making more gains.

A confirmation of bigger rates from Federal Reserve’s Powell has resulted in more fuel for US Treasury yields. The return on 10-year US Treasury bonds has recaptured the 4.0%. Rising US yields might result in a heavy sell-off in growth and tech stocks as their future cash flows will be discounted at a higher rate.

The street is aware of the United States’ persistent inflation and the need of bringing it down quickly to comfort households from rising payouts. The US inflation was declining at a higher rate than anticipation till December. However, January’s above-targeted inflation figures, resilience in consumer spending, and surprising heavy addition of payrolls in the labor market have renewed fears of stubborn inflation.

This forced Fed’s Powell to sound extremely hawkish for interest rate guidance. Fed’s Powell in his testimony before Congress cited “ultimate level of interest rates is likely to be higher than previously anticipated,” after the “latest economic data have come in stronger than expected.”

This week, Federal Reserve (Fed) Governor Christopher Waller cited February’s strong economic indicators as a one-time blip and the price pressures will resume their downtrend from next month. Contrary to that, Federal Reserve’s Powell was extremely harsh on interest rate guidance. For clarity, investors are keenly awaiting the release of the United States Automatic Data Processing (ADP) Employment Change data, which is seen at 200K, higher than the former release of 106K.

An upbeat US ADP Employment data will bolster the case of a bigger rate hike by the Fed in its March monetary policy meeting. As per the CME FedWatch tool, the chances of 50 basis points (bps) rate hike have reached 72%.

The Canadian Dollar is expected to deliver power-pack volatility as the Bank of Canada (BoC) will announce the interest rate decision ahead. Bank of Canada Governor Tiff Macklem has already announced a pause in the policy tightening spell as the central bank believes that the current monetary policy is restrictive enough to tame Canada’s sticky inflation. An unchanged monetary policy by the Bank of Canada and rising chances of bigger rates from the Federal Reserve will lead to a divergence in the Fed-BoC policy.

USD/CAD has come out of the previous seven-day consolidation and has also delivered a breakout of the Descending Triangle chart pattern on the daily scale. The downward-sloping trendline of the chart pattern is plotted from October 13 high at 1.3978 while the horizontal support is placed from November 15 low at 1.3226.

Advancing 10-period Exponential Moving Average (EMA) at 1.3634 indicates that the upside momentum is extremely powerful.

The Relative Strength Index (RSI) (14) is oscillating in the bullish range of 60.00-80.00, indicating that the bullish momentum is already active.

Technical Levels: Supports and Resistances

USDCAD currently trading at 1.3767 at the time of writing. Pair opened at 1.3752 and is trading with a change of 0.11 % .

The pair remains strongly bullish on the daily timeframe. It trades above its 20 SMA @ 1.3516, 50 SMA 1.3464, 100 SMA @ 1.3501 and 200 SMA @ 1.3295.

The previous day high was 1.3761 while the previous day low was 1.36. The daily 38.2% Fib levels comes at 1.37, expected to provide support. Similarly, the daily 61.8% fib level is at 1.3661, expected to provide support.

Note the levels of interest below:

• Pivot support is noted at 1.3647, 1.3543, 1.3486
• Pivot resistance is noted at 1.3808, 1.3865, 1.397

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