. Scaling Heights: USD/CAD Reaches Weekly Peak

Scaling Heights: USD/CAD Reaches Weekly Peak

05 Apr 2024

USD/CAD makes gains, nearing 1.3560, reaching its highest level for the week.

FUNDAMENTAL OVERVIEW:

  • USD/CAD could encounter an immediate resistance zone near the weekly peak of 1.3588 and the psychological threshold of 1.3600.
  • If it surpasses March’s peak of 1.3614, the pair might face a significant hurdle at 1.3650.

USD/CAD continues its upward momentum for the second straight session, hovering around 1.3560 in the European trading session on Friday. The next obstacle lies at the weekly peak of 1.3588, with further resistance at the psychological level of 1.3600.

Exceeding the psychological threshold may encourage the USD/CAD pair to challenge March’s peak of 1.3614, edging closer to the significant barrier at the 1.3650 level.

Yesterday, Thomas Barkin, President of the Federal Reserve Bank of Richmond, suggested that disinflation is expected to persist, although the pace of this trend remains uncertain. Barkin emphasized that maintaining somewhat restrictive rates could help bring inflation back to its target level. Additionally, Federal Reserve Chair Jerome Powell indicated that if the economy evolves as anticipated, FOMC officials believe it would be suitable to commence reducing policy rates.

Friday will see the release of US labor market data for March, expected to shed light on the Federal Reserve’s stance on interest rates. Forecasts anticipate that the Nonfarm Payrolls (NFP) report will reveal a job addition of 200,000 in March, down from February’s 275,000. Concurrently, the Unemployment Rate is expected to hold steady at 3.9%. Should the NFP data exceed expectations, it could reduce prospects of a June Fed rate cut, offering support to the US Dollar and benefiting the USD/CAD pair.

Regarding the Canadian Dollar, Canada’s trade surplus grew to $1.39 billion in February, surpassing January’s $0.61 billion and exceeding expectations, bolstering the Loonie. Moreover, heightened tensions in the Middle East driving oil prices up offer further support to the commodity-linked Canadian Dollar, potentially limiting the upside of the USD/CAD pair. Investors will await additional signals from Canadian labor market data later.

USD/CAD TECHNICAL ANALYSIS DAILY CHART:

Technical Overview:

USD/CAD is trading within an up channel.

USD/CAD is moving above all the Moving Averages (SMA).

The Relative Strength Index (RSI) is in the Buying zone, while the Stochastic oscillator suggests a Positive trend.

Immediate Resistance level: 1.3664

Immediate support level: 1.3603

HOW TO TRADE USD/CAD

After experiencing a decline, USD/CAD located a support level and reversed to the upside. It has formed a higher high structure, breaking through a significant resistance level. As long as it remains above this level, there is potential for further upward movement in price.

TRADE SUGGESTION- BUY LIMIT– 1.3611, TAKE PROFIT AT- 1.3707, SL AT- 1.3555.