General analysis USDCAD for 03.06.2022
Current Dynamics
The USD/CAD is consolidating near a one-month low of 1.2560 after a rapid decline on Thursday.
A noticeable decline in global demand, rising inflation, a prolonged armed conflict in Ukraine, the slowdown in the economy of the People's Republic of China, caused by COVID-19, plans of Saudi Arabia to increase oil production to avoid the impact of the Russian oil shortage, have an influence on trading activity, increasing the global appetite for risk, slowing the growth of safe-haven assets.
Thus, the dollar price is near the local minimums in the main currency pairs, the greenback bulls were in no hurry to show their activity before the release of the data on the US non-farm employment, which was forecasted rather negative and came out in accordance with those expectations. The low dynamics around the US dollar was also influenced by the low yield of American treasuries and worsening labor market situation.
The Bank of Canada demonstrated its seriousness in raising the key rate in an attempt to solve the problem of the growing inflation. On Wednesday, the central bank raised its interest rate by 50 bps to 1.5% for the second time this spring and created expectations of an identical hike at its next meeting. With Canadian inflation reaching its highest levels in three decades, the Bank of Canada has made its plans for the key rate to be in the range of 2%-3% as soon as possible clear and this may help the national currency to strengthen in case the planned strategy proves effective.
Meanwhile, the decline in the exchange rate at the moment is mainly due to a decrease in the price of WTI. Black gold is currently trading at $116. Prices are experiencing volatility amid OPEC+ announcement to increase production by 648 thousand barrels this month to make up for the global oil supply shortfall caused by economic sanctions against the Russian Federation.
Of the macroeconomic news expected to affect the pair's fate in the near future, the trade balance data, the Ivey Canadian Business Activity Index, Canadian and US exports and imports, the weekly US crude oil inventories from API coming out on Tuesday and the US crude oil inventories coming out on Wednesday are worth mentioning.
Support and resistance levels.
Alligator is hungry: his mouth is wide open, his jaw (blue line) hovers high above his lips and teeth (green and red lines), the instrument is in a downtrend. The nearest fractal below the alligator’s teeth (red line) is at 1,26060. Awesome Oscillator (AO) and Accelerator Oscillator (AC) are both in the green area, the bars are close to the zero level, which is a strong confirmatory buy signal.
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Support levels: 0,24700, 0,25050, 0.25420.
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Resistance levels: 1.26060, 1.26410, 1.26660.
Trading scenarios
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Long positions can be opened above the level of 1.26060, with a target of 1.26410 and stop loss 1.25750: Implementation period: 1-2 days.
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Short positions can be opened below the level of 0.25420 with a target of 0,25050 and stop loss 1.25750: Implementation period: 1-2 days.