The USD/CAD pair has been falling for the fifth week, trading around 1.3250.
Now, the pressure on the US currency is exerted by the possibility of a slowdown in the growth rates of the US Federal Reserve after the release of positive US inflation data for October: the rate fell from 8.2% to 7.7%. Yesterday, Federal Reserve Governor Christopher Waller confirmed this possibility, but he warned that investors should pay attention not to the rate of the interest rate increase but to its final value, which can be very high.
Despite the positive dynamics, the Canadian currency remains vulnerable due to fears of a significant economic downturn in the first half of 2023. Bank of Canada Governor Tiff Macklem said Monday that low-income households that don't have a serious airbag would be hardest hit. Nevertheless, the tightening of monetary policy will continue, as only the victory over high inflation will ensure new growth in the gross domestic product (GDP). Uncertainty in the oil market may also act as a negative factor for the Canadian dollar soon, where two trends continue to struggle – fear of a lack of supply due to production cuts by OPEC countries and an embargo on the supply of Russian raw materials to the EU countries and, on the other hand, a possible decrease in demand on "black gold" due to the increase in the incidence of coronavirus in China and the increase in the risks of a global recession. The second trend in investor sentiment is still winning, as hydrocarbon quotes have resumed their decline.
The price of the trading instrument is close to 1.3183 (Murrey [6/8], Fibonacci correction 50.0%), a breakdown of which will give the prospect of developing a decline to 1.3045 (Fibonacci correction 61.8%) and 1.2940 (Murrey [5/8]). The key "bullish" level is 1.3555 (the middle line of Bollinger bands, Fibonacci correction of 23.6%). If it consolidates above it, the price will be able to continue rising and return to October highs around 1.3900.
Technical indicators reflect the development of a decline: Bollinger bands and Stochastic are directed downwards, while the MACD histogram is increasing in the negative zone.
Resistance levels: 1.3555, 1.3900. | Support levels: 1.3183, 1.3045, 1.2940.