12 Nov 2024

current;-1.39336
target;-1.38490
sl;-1.39570

The USD/CAD currency pair has relinquished a portion of its intraday gains, despite the USD Index maintaining its position around 105.90. The Canadian Dollar has shown resilience, even as the US Dollar remains elevated, indicating a potential strengthening of the Loonie.

The US Dollar Index (DXY), which measures the value of the Greenback against six major currencies, has surged to approximately 105.90, marking its highest point in over four months. This increase is attributed to a favorable economic and inflation outlook in the United States, bolstered by President-elect Donald Trump's commitment to raise import tariffs and reduce corporate taxes during his campaign. Such policies may prompt the Federal Reserve to adopt a more cautious approach to monetary easing.

Currently, market expectations suggest that the Federal Reserve will lower interest rates by 25 basis points (bps) to a range of 4.25%-4.50% in its upcoming December meeting, as indicated by the CME FedWatch tool. Investors are also keenly awaiting the release of the US Consumer Price Index (CPI) data for October, scheduled for publication on Wednesday.

In contrast, the Canadian Dollar has rebounded, even though the Bank of Canada (BoC) is anticipated to implement a 50 basis point (bps) reduction in interest rates to 3.25% in December. This would mark the second consecutive 50 bps cut by the Fed.

The USD/CAD pair is currently trading near the upper limit of an Ascending Triangle chart pattern on a weekly basis, around the 1.3950 level. The upward-sloping 20-week Exponential Moving Average (EMA) at approximately 1.3740 indicates a robust upward trend.

The 14-day Relative Strength Index (RSI) is hovering around 60.00. If the RSI remains above this threshold, it could signal the onset of bullish momentum.

Further upward movement is likely if the asset surpasses the immediate resistance level of 1.3950.

On the contrary, a downside move below the October 29 low of 1.3875 will expose the asset to the October 15 high near 1.3840, followed by the round-level figure of 1.3800