USD/CAD Exchange Rate Prediction – The Dollar Rebounds on Rising Yields

Key Insights

• The dollar rebounded against the Loonie.
• Treasury yields moved higher, buoying the greenback.
• Canadian trade data showed a narrower than expected surplus.

USD/CAD moved higher, rebounding back through former support. The 2-year yield rose helping to generate tailwinds for the greenback.

Canada reported a narrower than anticipated trade surplus of C$1.5 billion, down from a revised C$2.3 billion. A 14.3% decline led the decline in the surplus in crude oil exports in volumes, which were primarily offset by natural gas exports.

Technical Analysis

The USD/CAD rebounded after declining earlier in the week. Target support is seen near an upward sloping trend line near 1.2450. There is strong resistance near the 200-day moving average at 1.2657. The 10-day moving average crossed below the 50-day moving average, which means that a short-term downtrend is now in place.

Short-term momentum has reversed and turned positive as the fast stochastic had a crossover buy signal. Prices are oversold. The fast stochastic is printing a reading of 10, below the oversold trigger level of 20.

Medium-term momentum turns negative as the MACD line might generate a crossover sell signal.

This scenario happens when the MACD line (the 12-day moving average minus the 26-day moving average) crosses the MACD signal line (the 9-day M.A. of the MACD line). The trajectory of the MACD is in positive territory, which reflects an upward trend in price movement.