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The USDCAD Received a Strong Impetus for Growth

3/8/2023 10:44 AM

After yesterday's growth today, during the Asian session, the USD/CAD pair is slightly strengthening, consolidating near the local highs of November 3, around 1.3755.

The reason for the emergence of the "bullish" trend was the speech of the head of the US Federal Reserve, Jerome Powell, in the Senate, who noted the need to raise interest rates to higher levels than estimated. At the same time, the regulator is also ready to speed up the process if there are good reasons for this. Against this background, traders decided to revise their forecasts for the March tightening of monetary policy: earlier, the market was almost sure of an increase in interest rates by only 25.0 basis points, while now the rise by 50.0 basis points has increased markedly. Also, markets are now expecting an increase in the indicator to 5.6% by the second half of 2023.

In turn, moderate pressure on the position of the Canadian currency is exerted by poor macroeconomic statistics. On Monday, Ivey business activity indexes for February were released: the indicator showed a sharp decline from 60.1 points to 51.6 points, which was significantly worse than market expectations of 57.7 points. At the end of the current trading week, the the market will focus on reports on the US and Canadian labor markets for February. Forecasts for them are rather ambiguous, so the US currency may continue its growth.

On the daily chart, Bollinger bands are steadily growing: the price range is expanding from above but at the moment it is not keeping with the surge of bullish activity in the US dollar. The MACD indicator is growing, keeping a strong buy signal (the histogram is above the signal line). Stochastic also maintains an upward direction but is close to its highs, indicating that the instrument may become overbought in the nearest time intervals.

Resistance levels: 1.3750, 1.3800, 1.3853, 1.3930. | Support levels: 1.3700, 1.3650, 1.3600, 1.3550.

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