Danger Ahead! USD/CAD Keeps Heading Up

Summary:

The CME FedWatch tool indicates that there is a 53% probability that the Federal Reserve will maintain current interest rates until the end of the year, whilst the remainder expect at least one rate rise this year.

BUY USDCAD

EXP

TRADING

1.37555

Entry Price

1.41000

1.35000

1.37927 +0.00483 +0.35%

0.0

Pips

Flat

1.35000

Exit Price

1.37555

Entry Price

1.41000

Fundamentals

Canada’s inflation rate rose to 2.8% in April, a significant acceleration from 2.4% in March, marking the first time in nearly two years that the annual increase in the Consumer Price Index has reached this level. Data released by Statistics Canada on 19 May showed that the main driver behind the rise in inflation was the sustained increase in global crude oil prices following the outbreak of the war in Iran, which in turn led to a sharp rise in petrol prices; the impact of energy price rises is rapidly spreading to the wider economy.

During his confirmation hearing before Congress, Walsh stated that the Federal Reserve’s independence is primarily manifested in the area of interest rate policy, whereas on broader issues such as international financial affairs, the Federal Reserve needs to coordinate with the presidential administration and Congress. This remark has raised concerns among some senior central bank officials that the Federal Reserve’s role in future global financial crises may change.

Technical Analysis

Looking at the USD/CAD on the four-hour chart, the Bollinger Bands are widening upwards and the moving averages are diverging upwards, indicating that the overall bullish trend remains intact. The RSI stands at 58, indicating that market sentiment is predominantly bullish. On the daily chart, the Bollinger Bands are narrowing and the moving averages are flattening. Following a bullish crossover on the MACD, the fast and slow lines have pulled back towards the 0-line, suggesting that the price is likely to rebound towards the 200-day EMA. With the RSI at 58, market sentiment remains largely optimistic. The recommended strategy is to buy on dips.

Danger Ahead! USD/CAD Keeps Heading Up_1

Danger Ahead! USD/CAD Keeps Heading Up_2

Trading Recommendation

Trading Direction: Buy

Entry Price: 1.374

Target Price: 1.41

Stop-loss Price: 1.35

Support Levels: 1.35, 1.325, 1.28

Resistance Levels: 1.4, 1.41, 1.42

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Danger Ahead! USD/CAD Keeps Heading Up

Risk Disclosure