Technical Analysis

USD/CAD Price Analysis – Nov 14, 2023

By LonghornFX Technical Analysis
Nov 14, 20233 min

Daily Price Outlook

Despite the bearish trend of the US dollar, the USD/CAD currency pair has continued its upward trajectory, reaching around 1.3810 during Tuesday's European session. This marks the second consecutive day of gains. However, the US dollar is currently facing challenges and is struggling to halt its losses, primarily due to the pressure from lower US bond yields. Traders are exercising caution and adopting a wait-and-see approach ahead of the release of US inflation data. This cautious sentiment is seen as one of the key factors contributing to the upward movement of the USD/CAD currency pair.

Yellen's Confidence and Inflation Outlook: Impact on USD/CAD Pair

It's worth noting that US Treasury Secretary Janet Yellen remains confident in the strength of the US economy, despite concerns raised by the credit rating agency Moody's. Last week, Moody's downgraded its outlook on US debt, expressing worries about substantial deficits and increasing debt costs. Yellen, however, disagrees with this assessment and assures that the US economy is robust, and the Treasury market is secure.

Looking ahead, all eyes are on the upcoming US inflation data, a crucial event for investors. The Federal Reserve has made it clear that its future decisions hinge on this data. If inflation aligns with expectations, investors might feel more secure, believing that the Fed's interest rate hikes are completed. This, in turn, could influence the direction of the USD/CAD pair. Yellen's confidence in the US economy amid Moody's concerns may ease investor worries.

Challenges for the Canadian Dollar Amidst Oil Trends

Moreover, the USD/CAD currency pair is going up because the Canadian Dollar (CAD) isn't getting stronger with the increase in crude oil prices, which are around $78.50. Even though the West Texas Intermediate (WTI) Crude is doing well, the CAD isn't benefiting. OPEC's monthly report says oil prices are strong, but there are worries because the US is putting more controls on Russian oil exports, affecting the oil supply.

Toni Gravelle, Deputy Governor of the Bank of Canada (BoC), is expected to talk about the challenges for keeping the economy stable and well-regulated during uncertain times. This discussion might give us a peek into what the BoC thinks about how things are going in the economy and the difficulties they face in keeping things stable and regulated.

 USD/CAD Price Chart – Source: Tradingview
 USD/CAD Price Chart – Source: Tradingview

USD/CAD - Technical Analysis

As we sift through the nuances of the USD/CAD pair, a subtle yet steady ascent marks the currency's trajectory, with the current price gently nudging at 1.3809. The dance between the U.S. dollar and the Canadian counterpart unfolds under a relatively sanguine RSI reading of 55.23, suggesting an equilibrium where neither bulls nor bears hold decisive dominion.

The chart's narrative unfolds between key price levels; the immediate resistance hovers at 1.3850, a breach of which could see the pair strive for the 1.3902 echelon. Conversely, the terrain beneath is shored up with support at 1.3784, a steadfast line that, if conceded, could see a descent towards the 1.3698 sanctuary.

In this meticulous choreography of numbers, the MACD whispers hints of a bullish bias without committing to a pronounced trend. The pair's proximity above the 50 EMA at 1.3784 lends credence to a short-term bullish outlook, yet this is a tale of tentative optimism, not of unbridled ascent.

The market's gaze now turns to forthcoming economic events, with each data release poised to serve as a catalyst that could either bolster the current sentiment or unravel it. Thus, the USD/CAD pair finds itself in a delicate interplay of technical indicators and fundamental forces, with traders keenly awaiting the next impetus that will determine the direction of its next decisive move.

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