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The USDCAD is Holding at Local Highs

12/19/2022 11:00 AM

During the Asian session, the USD/CAD pair shows ambiguous trading dynamics, trading near 1.3675.

At the end of last week, the positions of the American currency were supported by the results of the meeting of the US Federal Reserve, at which the interest rate was raised by 50.0 basis points. At the same time, the head of the regulator, Jerome Powell, hinted at the further tightening of monetary policy and that interest rates would remain high for a little longer than originally estimated. Meanwhile, analysts at Bank of America Corp. are confident of a recession in the national economy in 2023, despite the slowdown in inflation, which, according to them, will not be able to reach the target value of 2.0% soon. Therefore, the agency will maintain the “hawkish” rhetoric, resulting in which investors will likely redirect their attention to bonds in the next half of the year and to US corporate stocks in the second half.

The pressure on the US currency on Friday was exerted by uncertain macroeconomic data from the United States: S&P Global Service PMI in December fell from 46.2 points to 44.4 points, while the forecast was to increase to 46.8 points, Manufacturing PMI – from 47, 7 points to 46.2 points with neutral forecast expectations, and Composite PMI – from 46.4 points to 44.6 points. Canadian statistics on Friday recorded a positive trend in wholesale sales: in November, they increased by 2.1% after falling by 0.2% last month, while analysts predicted an increase in value but only by 1.3%. Tomorrow investors expect similar data on retail sales and on Wednesday – November data on consumer inflation.

On the daily chart, Bollinger bands are growing moderately: the price range narrows slightly, remaining quite spacious for the current level of activity in the market. The MACD indicator is growing, keeping a poor buy signal (the histogram is above the signal line). Stochastic remains in an upward direction but is near its highs, indicating that the US dollar may become overbought in the ultra-short term.

Resistance levels: 1.3700, 1.3750, 1.3800, 1.3850. | Support levels: 1.3650, 1.3600, 1.3550, 1.3500.

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