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The USDCAD Returned to Flat Dynamics in the Short Term

11/24/2022 11:09 AM

The US dollar is developing a downward trend during the Asian session, renewing local lows since November 18 and testing 1.3330 for a breakdown while remaining under pressure after the minutes of the US Federal Reserve meeting published yesterday. In the final document, the US financial department pointed to the advisability of further raising interest rates. Still, it emphasized the need to slow down the pace of tightening, thereby confirming the forecasts of analysts, 75% of whom counted on adjusting the interest rate during the December meeting by only 50.0 basis points.

Uncertain macroeconomic statistics from the US exerted additional pressure on the position of the US dollar. Manufacturing PMI in November decreased from 50.4 points to 47.6 points, which was noticeably worse than market expectations of 50.0 points, while Service PMI fell from 47.8 points to 46.1 points, contrary to preliminary estimates of a slight increase to 47.9 points, while Composite PMI fell from 48.2 points to 46.3 points against the forecast of 47.7 points.

Canadian investors also paid attention to the rhetoric of the head of the Bank of Canada, Tiff Macklem, who commented on the latest rate hike by 50.0 basis points. He noted that high values ​​are beginning to put downward pressure on the Canadian economy. However, to restore price stability, the regulator has to turn to unpopular measures.

On the daily chart, Bollinger Bands actively decline: the price range is narrowing, indicating an ambiguous nature of trading in the short term. MACD also shows a downward movement, forming a new sell signal (the histogram tends to be below the signal line). Stochastic is approaching its lows, indicating that the US dollar may become oversold in the ultra-short term.

Resistance levels: 1.3356, 1.3440, 1.3500, 1.3550. | Support levels: 1.3300, 1.3226, 1.3150, 1.3050.

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