- USD/CAD found fresh offers on Thursday and fell for the second day in a row.
- A further rise in oil prices underpinned the loonie and put downward pressure on the pair.
- Post-ECB purchases of the Euro weighed on the USD and added to the selling bias.
- US CPI mostly in line with expectations and risk aversion momentum should help limit losses for the dollar and the pair.
The pair USD/CAD dipped early in the American session and fell to a three-day low around the 1.2780 area in the last hour.
The pair struggled to preserve its intraday gains, instead finding fresh supply near the 1.2840 region on Thursday and entering negative territory for the second day in a row. The lack of progress in the ceasefire talks between Russia and Ukraine caused a new rise in crude oil prices. This, in turn, underpinned the commodity-linked Canadian dollar and was seen as a key factor putting downward pressure on the USD/CAD pair.
On the other hand, the ECB’s post-buying around the shared currency dragged the US dollar to a one-week low and further contributed to the pair’s intraday decline. That said, a new wave of risk-off global trading acted as a tailwind for the safe-haven US dollar, which was supported by mostly online US consumer inflation figures. This could extend some support for the USD/CAD pair and help limit deeper losses.
In fact, the US Bureau of Labor Statistics reported that the US headline CPI accelerated to a new 40-year high of 7.9% in February. The monthly figure also matched consensus estimates and rose 0.8% during the reported month from 0.6% in January. Meanwhile, core inflation, which excludes food and energy prices, moderated somewhat to 0.5% in February from 0.6% previously, although the annual rate rose to 6.4% from 6.0% in January.
The data added to concerns about a large inflationary shock, which was evident by an intraday rebound in US Treasury yields. Apart from this, the rapidly deteriorating global economic outlook and worsening of the situation in Ukraine should revive the demand for USD. This, in turn, supports the prospects for further buying around the USD/CAD pair.
Therefore, it will be prudent to wait for a strong follow-up sell off before confirming that the price has breached near the 1.2900 round level and placing further bearish bets on the USD/CAD pair. With Thursday’s key data out of the way, the focus returns to developments surrounding the Russia-Ukraine saga, which should continue to instill volatility in the FX market.
Technical levels
USD/CAD
| Panorama | |
|---|---|
| Last Price Today | 1.2786 |
| Today’s Daily Change | -0.0025 |
| Today’s Daily Change % | -0.20 |
| Today’s Daily Opening | 1.2811 |
| Trends | |
|---|---|
| 20 Daily SMA | 1.2741 |
| 50 Daily SMA | 1.2686 |
| 100 Daily SMA | 1.2663 |
| 200 Daily SMA | 1.2586 |
| levels | |
|---|---|
| Previous Daily High | 1.2895 |
| Previous Daily Minimum | 1.2804 |
| Previous Maximum Weekly | 1,281 |
| Previous Weekly Minimum | 1.2587 |
| Monthly Prior Maximum | 1.2878 |
| Previous Monthly Minimum | 1.2636 |
| Daily Fibonacci 38.2% | 1.2838 |
| Daily Fibonacci 61.8% | 1,286 |
| Daily Pivot Point S1 | 1.2778 |
| Daily Pivot Point S2 | 1.2745 |
| Daily Pivot Point S3 | 1.2687 |
| Daily Pivot Point R1 | 1.2869 |
| Daily Pivot Point R2 | 1.2927 |
| Daily Pivot Point R3 | 1,296 |
Source: Fx Street
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