In a week dominated by downward trends for the Canadian Dollar, a notable shift towards market Federal Reserve expectations has prompted investors to favor the US Dollar. Amidst this dynamic currency landscape, Crude Oil bids are making attempts at recovery, offering a potential limitation to the Loonie’s losses as we approach the end of the week.
The economic landscape in Canada has remained relatively subdued throughout the week, with a sparse showing on the economic calendar. Looking ahead to the next week, a similar outlook is anticipated as market attention centers on the US Dollar (USD), with investors navigating the tumultuous waters of shifting central bank expectations.
Market Update: Canadian Dollar Retreats, USD Gains Momentum
The CAD records a 1.5% decline against the USD, marking a fifth consecutive session in the red. The USD strengthens amid prevailing risk aversion, boosted by Federal Reserve Chairman Jerome Powell’s recent hawkish stance. Crude Oil’s modest gains on Friday support the Loonie, curbing CAD losses. Attention turns to next Tuesday’s US Consumer Price Index (CPI) figures, poised to influence Greenback traders.
USD/CAD Hits 1.3850: A Technical Analysis
This week witnessed a robust 1.65% ascent in the USD/CAD, propelling the Greenback-Loonie duo to well-known peaks and marking a pinnacle of 1.3850 on Friday.
The USD/CAD commenced the week on a bullish note, establishing a robust support level at $1.36457 before aiming for the $1.39000 price point, the closing mark from the previous week. However, the market fell short of reaching this target, encountering a bearish turn at $1.38572. Consequently, the week concluded with a closing value of $1.37899.
The bulls intervened at the $1.36000 price level, ensuring the continuity of the upward-trending price channel that originated around mid-July at the $1.3100 price level. Considering the historical market performance, there is a likelihood of the US Dollar sustaining its gains against the Canadian dollar.
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