#USDCAD @ 1.37495 seesaws around four-month high, remains sidelined after rising the most since late September 2022. (Pivot Orderbook analysis)

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• USD/CAD seesaws around four-month high, remains sidelined after rising the most since late September 2022.
• Hawkish comments from Fed Chair Powell, downbeat Oil price propels Loonie price.
• Expectations of no change in interest rates from Bank of Canada adds strength to the upside momentum.
• Powell’s Testimony 2.0, US ADP Employment Change also appear important for clear directions.

The pair currently trades last at 1.37495.

The previous day high was 1.3629 while the previous day low was 1.3582. The daily 38.2% Fib levels comes at 1.3611, expected to provide support. Similarly, the daily 61.8% fib level is at 1.36, expected to provide support.

USD/CAD bulls take a breather around the highest levels since early November 2022, following the biggest daily jump in five months. That said, the Loonie pair seesaws around 1.3750 as traders appear cautious ahead of the Bank of Canada (BoC) Interest Rate Decision on Wednesday.

Hawkish comments from Federal Reserve (Fed) Chairman Jerome Powell in his Semi-Annual Testimony to the US Congress propelled the USD/CAD prices late Tuesday. That said, policymaker surprised markets by showing readiness for more rate hikes and bolstered the bets of a 50 bps Fed rate hike in March.

With the “higher for longer” Fed rate expectations back on the table, the market’s risk appetite roiled and weighed on the commodity prices, while also fueling the US Dollar Index (DXY). It should be noted that Wall Street closed in the red and the US Treasury bond yields remained firmer with the two-year counterpart flashing the highest levels since 2007.

The risk-aversion wave joined fresh US-China tensions to exert more downside pressure on the WTI crude oil prices, Canada’s key export. It should be noted that the slump in the Oil price ignored a surprise draw in the Weekly Crude Oil Stock details from the American Petroleum Institute (API), an industry source. That said, the WTI crude oil marked the heaviest daily slump in two months the previous day, making rounds to $77.20-30 during the early hours of Wednesday.

Looking forward, the BoC’s pause in the rate hike trajectory will be crucial to watch and can propel the USD/CAD prices further if the inaction is likely to be stretched forward. It’s worth noting, however, that a surprise rate hike won’t be taken lightly and can allow the Loonie pair to consolidate the previous day’s heavy gains.

Also read: Bank of Canada Preview: Canadian Dollar set to climb on hawkish hold, market positioning

Apart from the BoC, Canadian Trade Balance for February and the US ADP Employment Change, the early signal for Friday’s US Nonfarm Payrolls (NFP), will be in focus. Furthermore, the second round of Fed Chair Jerome Powell’s testimony, this time in front of the US House of Representatives Financial Services Committee, will also be crucial to watch for clear directions.

A one-month-old ascending resistance line joins the overbought RSI (14) line to challenge USD/CAD bulls around 1.3775.

Technical Levels: Supports and Resistances

USDCAD currently trading at 1.3752 at the time of writing. Pair opened at 1.3616 and is trading with a change of 1.00% % .

The pair remains strongly bullish on the daily timeframe. It trades above its 20 SMA @ 1.3499, 50 SMA 1.346, 100 SMA @ 1.3501 and 200 SMA @ 1.3289.

The previous day high was 1.3629 while the previous day low was 1.3582. The daily 38.2% Fib levels comes at 1.3611, expected to provide support. Similarly, the daily 61.8% fib level is at 1.36, expected to provide support.

Note the levels of interest below:

• Pivot support is noted at 1.3589, 1.3562, 1.3543
• Pivot resistance is noted at 1.3636, 1.3656, 1.3683

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