During the Asian session, the USD/CAD pair is around local lows from March 7, renewed on March 23, and is testing 1.3630 for a breakdown.
The pressure on the positions of the US currency at the beginning of the week is exerted by the improvement in investor sentiment on the market. Yesterday, the media reported that the American bank, First Citizens Bancshares Inc., expressed readiness to purchase almost half of the loan portfolio of the bankrupt Silicon Valley Bank, which should help restore depositors' access to their funds. Also, the move could boost confidence among consumers who have withdrawn about 100.0B dollars from their accounts held at medium and small banks in the past few weeks.
Meanwhile, according to the ex-head of the Bank of Canada, Stephen Poloz, the risks of the national economy plunging into recession are actively increasing. The official is confident that the measures taken by the financial authorities to curb record inflation, which reached a 40-year peak of around 8.1% in summer, are effective since the figure consolidated at 5.2% in February but the consequences of tightening monetary policy, in his opinion will soon emerge, especially in the real estate and investment sectors. He noted the positive developments in the labor market, which has seen an influx of labor through adult immigration following the announced childcare support measures, as well as 196.0B dollars in health care funding for the provinces over the next ten years, which will be directed into four priority areas, including family medicine, surgical equipment, mental health, and upgrading data collection systems.
The focus of investors on Tuesday will be the March US statistics on consumer confidence, as well as the index of business activity in the manufacturing sector of the Federal Reserve Bank (FRB) of Richmond, which, according to forecasts, will increase from –16.0 points to –7.0 points. Also, during the day, traders are waiting for the publication of the draft annual budget of the federal government of Canada, which will partly assess the effectiveness of the monetary policy pursued by the Bank of Canada.
On the daily chart, Bollinger bands are declining as the price range narrows, indicating ambiguous trading in the short term. The MACD indicator is pointing downwards, keeping a sell signal (the histogram is below the signal line). Stochastic is rapidly approaching its lows, indicating that the US currency may become oversold in the ultra-short term.
Resistance levels: 1.3650, 1.3700, 1.3750, 1.3800. | Support levels: 1.3600, 1.3535, 1.3500, 1.3440.