Last Thursday marks the second consecutive day that the Canadian Dollar (CAD) has strengthened against the US Dollar (USD), propelled by an overall improvement in global risk appetite.
Investors Await BoC After The Dovish FOMC
On Wednesday, for the first time in years, the US Federal Reserve (Fed) altered its course and introduced the possibility of rate cuts. As a result of this change in market sentiment, the USD depreciated to all-time lows. On Thursday, the US Dollar experienced its weakest performance among major currencies, resulting in the CAD reaching its highest level in eleven weeks.
Regarding the economy, Canada's data offerings on Thursday are restricted to low-tier datasets. CAD traders anxiously anticipate a speech by Bank of Canada (BoC) Governor Tiff Macklem scheduled for late Friday. Pre-written speech notes for Governor Macklem's address to the Canadian Club of Toronto. There will be queries from the audience throughout the event.
The US Dollar (USD) is experiencing its second consecutive day of substantial downward movement. It started on Wednesday during a speech by Jerome Powell, chairman of the US Federal Reserve (Fed). The sentiments of market participants regarding possible future increases in interest rates and the Federal Reserve's adaptability in addressing inflation were largely disregarded. The focal point was the dot plot projections that suggested a consensus regarding interest-rate reductions in 2024.
USDCAD Technical Analysis
In the daily chart of USDCAD, the overall market momentum is bearish as the latest daily candle closed below the critical trend line support. Moreover, the downside momentum is backed by an ongoing continuation from the Head and Shoulders breakout.
In the recent chart, the dynamic 20 EMA acts as a critical resistance at the 1.3618 level from where the latest downside pressure has come. Although the CAD bulls have a confluence support from the Crude oil, the USDCAD bearish pressure has extended from the 20 EMA level.
Based on the daily outlook, an immediate bullish correction at the 1.3481 static level could be a bearish continuation opportunity in this pair. However, a daily candle above the 1.3550 level could indicate a trend reversal and increase the price toward the 1.3618 resistance level.
Moreover, the immediate support level is at the 1.3379 level, from where a minor buying pressure could come. However, breaking below the 1.3300 psychological level could lower the price towards the 1.3152 support level.
