- USD/CAD bounces off 1.2350 daily lows, trimming Monday’s losses.
- Risk-on market sentiment in equity markets, in the FX market, safe-haven assets have the upper hand.
- USD/CAD bullish above 1.2528, otherwise sellers are in control.
USD/CAD climbs during the New York session, up 0.30%, trading at 1.2406 at the time of writing. As the North American session winds down, the market sentiment is upbeat, with the S&P 500 and the Dow Jones Industrial printing new all-time highs, while the Nasdaq Composite finished in the green.
Earlier in the Asian session, the USD/CAD pair was changing hands around the 1.2350 area, Tuesday’s low. But once European traders got to their desks, the pair broke to the upside, printing a daily high at 1.2420, retreating later, settling at current levels.
That said, FX markets dynamics were more risk-averse in contrast to equity markets. Safe-haven currencies like the greenback and the Japanese yen got a boost as investors got ready for the Federal Reserve meeting.
Investors expect a bond taper announcement by the US central bank, as telegraphed by the parade of Fed speakers in the last month. Also, Fed Chairman Jerome Powell, in a Bank of International Settlements virtual event, said that “I do think its time to taper.” Furthermore, Powell added: “I don’t think it is time to raise rates,” pushing back the expectations of a hike rate.
In the outcome of a hawkish Federal Reserve, an upward move in the USD/CAD pair would be capped because the Bank of Canada (BoC) is one step ahead of the Fed, as the BoC ended its QE program, as it gets ready for hiking rates.
USD/CAD Price Forecast: Technical outlook
Daily chart
The USD/CAD depicts the pair is under some buying pressure, as witnessed by the loonie testing the top of a bearish flag pattern around 1.2406, which would invalidate the pattern in case of being upward broken. Furthermore, the daily moving averages (DMA’s) are above the spot price, with the longer time frame 200-DMA, beneath the short time-frame ones.
For USD bulls, a break above the channel’s top would immediately expose the 200-DMA at 1.2483. The next resistance level would be the 100-DMA at 1.2528.
On the flip side, USD/CAD bull’s failure at 1.2400 leave sellers in control. To accelerate the downward trend, they need a break below 1.2300. Once that is achieved, the next stop on the way south would be the June 23 low at 1.2252.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD stays near 1.0400 in thin holiday trading
EUR/USD trades with mild losses near 1.0400 on Tuesday. The expectation that the US Federal Reserve will deliver fewer rate cuts in 2025 provides some support for the US Dollar. Trading volumes are likely to remain low heading into the Christmas break.
GBP/USD struggles to find direction, holds steady near 1.2550
GBP/USD consolidates in a range at around 1.2550 on Tuesday after closing in negative territory on Monday. The US Dollar preserves its strength and makes it difficult for the pair to gain traction as trading conditions thin out on Christmas Eve.
Gold holds above $2,600, bulls non-committed on hawkish Fed outlook
Gold trades in a narrow channel above $2,600 on Tuesday, albeit lacking strong follow-through buying. Geopolitical tensions and trade war fears lend support to the safe-haven XAU/USD, while the Fed’s hawkish shift acts as a tailwind for the USD and caps the precious metal.
IRS says crypto staking should be taxed in response to lawsuit
In a filing on Monday, the US International Revenue Service stated that the rewards gotten from staking cryptocurrencies should be taxed, responding to a lawsuit from couple Joshua and Jessica Jarrett.
2025 outlook: What is next for developed economies and currencies?
As the door closes in 2024, and while the year feels like it has passed in the blink of an eye, a lot has happened. If I had to summarise it all in four words, it would be: ‘a year of surprises’.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.