USD/CAD Decline:Analyzing Market Trends and Geopolitical Tension
The USD/CAD pair continued its downward trajectory on Tuesday, February 13th, with the price currently hovering around 1.34500. Observers noted a strong resistance level below 1.35500, marked by a triple top formation and a breach below the 200-day Moving Average. Adding weight to this resistance, the price encountered the 78.6% Fibonacci level, solidifying the market sentiment against further upward movement.
Market analysts are eyeing the upcoming US Consumer Price Index (CPI) release with expectations of a potential moderation. Projections suggest a year-on-year increase of 2.9%, a slight decrease from the previous rise of 3.4%. Similarly, the monthly rate is anticipated to hold steady at 0.2%. Core CPI figures are expected to follow a similar pattern, with a projected YoY increase of 2.9% and a monthly rate of 0.3%.
Despite the positive momentum of the US Dollar Index (DXY), trading around 104.20, its ascent may be tempered by subdued US Treasury yields. Current yields stand at 4.47% for the 2-year and 4.18% for the 10-year bonds, restraining the dollar's strength.
Conversely, the Canadian Dollar may find support from rising crude oil prices, buoyed by geopolitical tensions in the Middle East. Canada's significant oil exports to the United States position the currency favorably amidst escalating tensions.
The recent incident involving Yemen's Houthi rebels launching missiles at a ship bound for Iran's port has further elevated crude oil prices. Despite minor damage to the vessel and no injuries reported, the geopolitical unrest adds pressure on oil markets.
Amidst these market dynamics and geopolitical tensions, our analysis leans towards a bearish continuation for the USD/CAD pair. As investors navigate through uncertainties, staying abreast of economic indicators and geopolitical developments will be crucial for informed decision-making.
Our preference
Short positions below 1.36300 with targets at 1.3400 & 1.3300 in extension.
Market analysts are eyeing the upcoming US Consumer Price Index (CPI) release with expectations of a potential moderation. Projections suggest a year-on-year increase of 2.9%, a slight decrease from the previous rise of 3.4%. Similarly, the monthly rate is anticipated to hold steady at 0.2%. Core CPI figures are expected to follow a similar pattern, with a projected YoY increase of 2.9% and a monthly rate of 0.3%.
Despite the positive momentum of the US Dollar Index (DXY), trading around 104.20, its ascent may be tempered by subdued US Treasury yields. Current yields stand at 4.47% for the 2-year and 4.18% for the 10-year bonds, restraining the dollar's strength.
Conversely, the Canadian Dollar may find support from rising crude oil prices, buoyed by geopolitical tensions in the Middle East. Canada's significant oil exports to the United States position the currency favorably amidst escalating tensions.
The recent incident involving Yemen's Houthi rebels launching missiles at a ship bound for Iran's port has further elevated crude oil prices. Despite minor damage to the vessel and no injuries reported, the geopolitical unrest adds pressure on oil markets.
Amidst these market dynamics and geopolitical tensions, our analysis leans towards a bearish continuation for the USD/CAD pair. As investors navigate through uncertainties, staying abreast of economic indicators and geopolitical developments will be crucial for informed decision-making.
Our preference
Short positions below 1.36300 with targets at 1.3400 & 1.3300 in extension.
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