The USD/CAD currency pair has reached our last growth target. As it was written earlier, the Canadian dollar continues to ignore the oil market movement. Thus, yesterday's 3% rise in oil from the lows caused the strengthening of the U.S. dollar, and it should be the opposite. The theory that the currency pair at the moment reacts mostly to the monetary policy of central banks is confirmed once again.
Regulators continue to fight inflation.
Hawkish forecasts from major central banks and the prospect of additional interest rate hikes are supporting the U.S. dollar. On Wednesday, European Central Bank (ECB) President Christine Lagarde said about the beginning of a new phase in the fight against high inflation in the Eurozone, which could last for some time.
Federal Reserve System (Fed) Chairman Jerome Powell confirmed the potential for 2 rate hikes this year. The U.S. dollar is trading near a two-week high, and further growth is possible.
At the moment, market participants are waiting for the U.S. economic data to be released. They can stimulate demand for the U.S. dollar.
The U.S. currency is also supported by the economic stability against the background of the key rate growth.
The number of housing purchases rose to a record high in more than a year, durable goods orders exceeded forecasts, and consumer confidence reached its highest level since early 2022. At the same time, real estate prices in the U.S. rose for the third month in a row.
This kind of data does not deny the possibility of a recession next year. However, the risks have decreased significantly. The latest reports on retail sales, labor market and inflation-adjusted consumer expenditures confirm this.
According to the technical analysis, the USD/CAD currency pair was able to make a U-turn and break the downtrend. It is important that the reversal occurred simultaneously with the growth of the dollar. Based on the latest dynamics, the Canadian currency will follow the dollar index. Further growth of USD/CAD may continue up to the level of 1.333. There is a resistance level, which has been relevant for the last couple of months. Stop-loss can be set at the update of today's low of 1.323.
Growth of the USDCAD currency pair:
Take profit – 1.333
Stop-loss – 1.323
This content is for informational purposes only and is not intended to be investing advice.
