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US Currency Develops the “Bullish” Dynamics

11/21/2022 10:41 AM

During the Asian session, the USD/CAD pair is developing the "bullish" momentum that formed last week when the quotes renewed the local lows of September 15 and are testing the level of 1.3400 for a breakout.

The US currency is supported by the comments of the US Federal Reserve representatives, reflecting the "hawkish" rhetoric of the regulator. Thus, the President of the Federal Reserve Bank (FRB) of St. Louis, James Bullard, called for maintaining the policy of raising interest rates since the previously taken measures only slightly affected the dynamics of consumer inflation: October data reflected a slowdown in consumer price growth from 8.2% to 7.7%, which, however, was better than the average forecasts of analysts.

On Tuesday, investors expect the publication of statistics from Canada on retail sales for September. Current forecasts suggest a fall of 0.7% after rising by the same amount last month, and excluding car sales, the value could fall by 0.4%. Also, tomorrow, the speech of the representative of the Bank of Canada, Carolyn Rogers, is expected.

The head of the Canadian regulator, Tiff Macklem, said that according to the agency's forecasts, until the middle of next year, the national economy will grow close to zero, so the "hawkish" policy in the field of raising interest rates will continue. However, this will put even more pressure on households, struggling to keep up with the rising cost of living and borrowing costs. If the adjustment process is interrupted prematurely, the official said, inflation will continue to rise, and the Bank of Canada will have to take even more decisive steps in the issue of tightening monetary stimulus.

On the daily chart, Bollinger Bands are steadily declining. The price range is narrowing, reflecting the ambiguous nature of short/medium term trading. The MACD indicator is growing, keeping a strong buy signal (the histogram is above the signal line). Stochastic keeps a confident upward direction but is near its highs, indicating that the US currency may become overbought in the ultra-short term.

Resistance levels: 1.3440, 1.3500, 1.3550, 1.3600. | Support levels: 1.3356, 1.3300, 1.3226, 1.3150.

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