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The USDCAD Wins Back the Lost Positions

1/11/2023 10:35 AM

The USD/CAD pair trades with mixed dynamics during the morning session, holding near 1.3430. The day before, the US dollar managed to show a weak corrective growth, retreating from the local lows of November 25, updated at the beginning of the week. However, investors are in no hurry to open new trading positions ahead of tomorrow's publication of December statistics on consumer inflation in the US. Market participants are waiting for confirmation of information about a possible increase in the interest rate by the US Federal Reserve by 25 basis points, which will indicate the gradual completion of the current cycle of tightening monetary conditions. Nevertheless, the regulator is still being cautious: at the forum held the day before, the Chair of the Fed Jerome Powell decided not to touch on the prospects for monetary policy, which added uncertainty to the market.

The Canadian dollar, in turn, received little support from macroeconomic data released on Monday. The number of Building Permits issued in November showed a sharp increase of 14.1% after falling by 5.3% in the previous month, while analysts expected a positive trend of 3.7%. Meanwhile, real estate prices in Canada continue to decline: in 2022, the cost of detached houses fell by 11.3%, duplexes fell by 13.9%, and townhouses lost 6.4%, while the number of transactions decreased by 49.4%, and the current dynamics is likely to continue. According to Meridian, the largest credit union in the country, the completion of the tightening of monetary stimulus by the Bank of Canada will allow demand to be adjusted by reducing the cost of mortgage borrowing, which will allow the national real estate market to begin an active recovery by the middle of next year.

Bollinger Bands in D1 chart demonstrate a stable decrease. The price range is expanding from below, remaining spacious enough for the current activity level in the market. MACD is going down preserving a stable sell signal (located below the signal line). Stochastic, having approached its lows, is trying to reverse into an upward plane, signaling in favor of the development of a "bullish" correction in the near future.

Resistance levels: 1.3450, 1.3500, 1.3550, 1.3600. | Support levels: 1.3400, 1.3356, 1.3300, 1.3250.

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