Economic Data Plummets! USD/CAD Stabilizes Above 1.38

Summary:

The latest developments in the Middle East crisis have dampened hopes of a diplomatic resolution to the three-month-long war in Iran, and have also weakened the US dollar’s status as a safe-haven currency.

BUY USDCAD

EXP

TRADING

1.38578

Entry Price

1.42000

1.36000

1.38223 -0.00178 -0.13%

0.0

Pips

Flat

1.36000

Exit Price

1.38578

Entry Price

1.42000

Fundamentals

The United States and Mexico are set to launch a new round of bilateral trade agreement negotiations, with Canada not included in the current arrangements. According to the schedule released by the Office of the United States Trade Representative, Deputy US Trade Representative Jeffrey Gottman will chair the first round of talks in Mexico City this week, focusing on economic security and rules of origin for critical industrial products. Subsequent rounds of talks will follow in Washington in June and in Mexico City in July, covering topics such as agriculture, a level playing field and manufacturing supply chains.

Concerns regarding inflation risks are also mounting within the Federal Reserve. Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, stated that rising energy prices caused by the war in the Middle East are sending new “inflationary shockwaves” through the global economy, which are gradually being reflected in global bond markets. He believes that, in the context of five years of high inflation, the Federal Reserve can no longer simply ignore short-term energy price shocks as it did in the past, as the public will be paying closer attention to whether the central bank is truly committed to controlling inflation. Kashkari pointed out that, whilst the US labour market as a whole remains in a “relatively good position”, the risk of inflation may now outweigh the risk of a deterioration in employment. Rising energy prices not only affect petrol costs but will also gradually feed through to various sectors, including transport, manufacturing and services, thereby creating broader price pressures.

Technical Analysis

Looking at the USD/CAD on the four-hour chart, the Bollinger Bands are beginning to widen upwards, the moving averages are diverging upwards, and the MACD fast and slow lines continue to trade above the zero line; the overall bullish trend remains intact. The RSI stands at 68, indicating that market sentiment is predominantly bullish. On the daily chart, the Bollinger Bands are widening upwards and the moving averages are diverging upwards. Following a golden cross on the MACD, the fast and slow lines have returned above the zero line, suggesting a high probability that the price will rise to 1.39. With the RSI at 68, market sentiment remains largely optimistic. The recommended strategy is to buy on dips.

Economic Data Plummets! USD/CAD Stabilizes Above 1.38_1

Economic Data Plummets! USD/CAD Stabilizes Above 1.38_2

Trading Recommendation

Trading Direction: Long

Entry Price: 1.385

Target Price: 1.42

Stop-loss Price: 1.36

Support Levels: 1.35, 1.325, 1.28

Resistance Levels: 1.4, 1.41, 1.42

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Economic Data Plummets! USD/CAD Stabilizes Above 1.38

Risk Disclosure