On Wednesday, February 26, the USDCAD currency pair continued its upward movement. After opening at 1.43120, the pair gained 0.7% by midweek.
The dollar index showed a partial recovery following its decline the previous day, which was driven by a drop in U.S. government bond yields. The yield on 10-year U.S. Treasury bonds fell by 7 basis points to 4.32%, reaching its lowest level since mid-December.
The dollar is receiving support from the protectionist policies of the U.S. president. On February 24, Donald Trump announced that tariffs on imports from Canada and Mexico would be imposed as planned on March 4. However, markets reacted with less concern, as analysts, including those at Morgan Stanley, believe this is primarily a negotiating tactic. Additionally, weaker-than-expected U.S. economic data highlights ongoing challenges in the economy.
On the other hand, financial activity in Canada is slowing down ahead of the tariffs. A new proposal to impose sectoral tariffs on copper, 28% of which is imported to the U. S. from Canada, is also weighing on market sentiment.
The next key events are the release of U.S. GDP data on February 27, expected to remain unchanged at 2.3%, and Canadian GDP data on February 28, forecasted at 2.2%. If either report meets or exceeds expectations, it could strengthen the respective currency. Conversely, weaker-than-expected data could lead to a decline.
From a technical perspective, further price growth is expected, with the possibility of a correction. The MACD indicator suggests a weakening bearish trend, as the histogram's negative values are decreasing and the signal line has stabilized, indicating reduced selling pressure.
The RSI oscillator has been rising since its rebound on February 21. Currently at 50, it remains in the neutral zone, providing no clear buy or sell signals.
The Chaikin oscillator is showing positive momentum, having got above the zero mark on Tuesday. This indicates that buying volume exceeds selling volume, which could support further price increases.
Overall, these indicators suggest the potential for the bullish trend to continue, though a correction remains possible.
It is recommended to open a long position on USDCAD ahead of the U.S. tariff implementation, anticipating a potential decline in the Canadian dollar.
Recommendation:
Buy at the current price. Take profit — 1.44000. Stop loss — 1.42400.
This content is for informational purposes only and is not intended to be investing advice.
