- USD/CAD creeps lower below the 1.3700 figure on sentiment improvement and falling UST bond yields.
- US jobs data continues to justify further tightening by the Federal Reserve.
- USD/CAD Price Analysis: Once it falls below 1.3600, the 100-DMA is eyed.
USD/CAD sellers moved in on Thursday after being kept at the sidelines on a risk-on impulse. Although the US Federal Reserve (Fed) raised rates as expected, market participants perceived Powell and Co.’s move as dovish. That said, the USD/CAD has fallen 0.56% or 76 pips, exchanging hands at 1.3654.
Unemployment claims in the US remain depressed as the Fed battles inflation
Wall Street remains bolstered by an upbeat mood. Investors had digested words from Janet Yellen, the US Treasury Secretary, who said that the United States (US) government is not planning to introduce blanket insurance to all depositors. However, a dovish rate hike by the Fed improved risk appetite.
Data-wise, the US economic docket featured Initial Jobless Claims for the week ending on March 18, which fell by 1,000, to 191,000 below estimates of 201,000. That reinforced the Fed’s view of a tight labor market and warranted further action by the US central bank. At the same time, the Chicago Fed National Activity Index for February plunged to -0.19 vs. the prior’s month 0.23
In the meantime, the US Dollar Index, a gauge of the buck’s value against a basket of six currencies, continues to stumble and is down 0.31% at 102.213, undermined by falling US Treasury bond yields.
Therefore, the Canadian Dollar (CAD) is being boosted by a softer US Dollar and high oil price, with Western Texas Intermediate (WTI) rising above the $70.00 a barrel threshold, for the first time since March 15. Therefore, the USD/CAD is set to continue to fall as the US Dollar continues to weaken.
USD/CAD Technical levels
After sliding below the 1.3700 figure, the USD/CAD is extending its losses past the 20-day Exponential Moving Average (EMA) at 1.3668. Additionally, the pair is trading at two-week new lows, with sellers eyeing a test of the March 3 low at 1.3550. But firstly, the USD/CAD needs to conquer the 1.3600 figure. A breach of the latter will expose the 50-day EMA at 1.3584 before testing 1.3550, ahead of dropping to the 100-day EMA at 1.3509.
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