USD/CAD Price Prediction – USD/CAD slides as dollar weakness counters rising oil prices

Key Insights

  • Gold prices move higher as a safe-haven asset.
  • Treasury yields continue to tumble on rising bond prices.
  • Oil prices rise on the prospect of a Russian oil embargo.

USD/CAD faces weakness on weaker-than-expected US jobs data. Gold prices rise on its safe-haven appeal as yields and the dollar slide. The dollar eases on disappointing jobs data. Benchmark yields slid as investors piled into bonds amid the market sell-off.

The ten-year yield slid by 7 basis points today. Oil prices rose on the prospect of a European ban on Russian oil. This situation has countered plans of easing restrictions in Shanghai, which can boost demand.

Last week’s jobless claims unexpectedly moved to their highest levels since January. Initial claims rose to 218,000, increasing by 21,000 from the previous week. However, continuing claims dropped to 1.32 million, the lowest level since 1969.  

The Fed’s plan for higher interest rates reduces demand for labor. The Fed’s plans to aggressively tighten rates to rein in inflation can reduce the tightness of the labor market, and there might be an uptick in demand compared to job supply.

Technical Analysis

The USD/CAD remains in the 1.28 region despite the selling of the dollar. he 1.287 level. However, the risk-off environment should underpin the dollar and encourage some buying of the dip among investors.

A more aggressive Fed should boost yields and further support the upside for the currency pair.

Resistance is seen near the 10-day moving average of 1.292. Support is seen near the May 5th low near 1.27. Short-term momentum turned negative as the fast stochastic had a crossover sell signal. 

Medium-term momentum turns negative as the MACD line might generate a crossover sell signal. This scenario happens when the MACD line (the 12-day moving average minus the 26-day moving average) crosses the MACD signal line (the 9-day MA of the MACD line).

The trajectory of the MACD is in positive territory, which reflects an upward trend in price movement.