Current trend

This week, the USD/CAD pair had ambiguous dynamics: at first, it fell to the area of 1.3455, but by now it has regained lost positions and is trading at 1.3570.

The downtrend in US currency quotes was primarily related to the results of the US Federal Reserve meeting, at which the regulator kept the key rate at 5.50%, while the inflation growth forecast was raised from 2.4% to 2.6%. Despite this, the "dot plot" confirmed the forecast of a threefold reduction in interest rates this year, despite an increase in inflationary pressure in January-February. All this strengthened the hopes of most investors that monetary policy easing would take place as early as June, and provided support for assets alternative to the US dollar.

Nevertheless, since Thursday, CAD has already been under pressure, as investors focused on the upcoming steps of the Bank of Canada (BoC), as February inflation data in the country turned out to be positive: the consumer price index (CPI) decreased from 2.9% to 2.8% YoY with preliminary estimates of 3.1%, and the base indicator – from 2.4% up to 2.1%. Thus, inflation is slowing down faster than expected, which creates the prerequisites for an early start of interest rate cuts by the Canadian regulator. Indirectly, this possibility was confirmed by BoC Deputy Governor Toni Gravelle, who said that the February inflation data were "very encouraging" and added that officials would analyze them together with other macroeconomic data at the April 10 meeting. These comments suggest that the Bank of Canada may begin easing monetary policy earlier than in the second half of the year, which puts pressure on the national currency.

Support and resistance

The instrument has consolidating above the central line of Bollinger Bands and is close to the 1.3610 mark (Murrey level [7/8]), the breakout of which will allow the quotes to continue growing to 1.3671 (Murrey level [8/8]), 1.3732 (Murrey level [ 1/8]), 1.3793 (Murrey level [ 2/8]). The key for the "bears" is the level of 1.3427 (Murrey level [4/8]), supported by the lower line of Bollinger Bands, the breakdown of which can cause the development of a decline towards the targets of 1.3305 (Murrey level [2/8]) and 1.3183 (Murrey level [0/8]).

Technical indicators confirm the likelihood of a resumption of growth: Bollinger Bands are reversing up, Stochastic is also making an attempt at an upward reversal, and MACD is increasing in the positive zone.

Resistance levels: 1.3610, 1.3671, 1.3732, 1.3793.

Support levels: 1.3427, 1.3305, 1.3183.

Trading tips

Long positions can be opened above 1.3610 with targets of 1.3671, 1.3732, 1.3793 and stop-loss around 1.3565. Implementation period: 5–7 days.

Short positions should be opened below the level of 1.3427 with targets of 1.3305, 1.3183 and a stop-loss around 1.3500.