- The USD/CAD forecast is bullish as US yields surge.
- The Canadian dollar remains under pressure amid weaker WTI and tariff fears.
- Fed speeches and Nvidia’s earnings are key to watch today.
The USD/CAD forecast remains elevated as the price posts a fourth consecutive session in gains. The pair is trading at 1.4330 at the time of writing. The US dollar surges as Treasury yields soar. The 2-year and 10-year yields have risen to 4.13% and 4.33%, respectively.
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The Fed’s Richmond President, Thomas Barkin, projected a decline in the US Core PCE figures, highlighting the Fed’s progress in coping with inflation. However, he maintained a “wait and see” stance for the next cuts due to economic uncertainties.
The Canadian dollar remains under pressure as President Trump reaffirmed the tariff imposition on Mexico and Canada. Despite the diplomatic efforts of Canada to get exemptions, Trump’s hard stance has thickened the trade relations concerns. Moreover, Trump’s assertion that the US doesn’t need Canadian crude oil or lumber poses a threat to the historic trade relationship between the two countries.
Falling crude oil prices due to demand concerns further weaken the Canadian dollar. The WTI prices have declined to $69.00 as US economic growth remains a concern while global uncertainties prevail. A potential peace deal between Russia and Ukraine could result in lifting the Russian oil ban, which could further boost the supply and weigh down prices.
Despite the USD/CAD’s recent rally, the broader sentiment could limit the gains. The US economic data shows growth concerns as consumer sentiment data fell to the lowest level since Aug 2021.
Nvidia’s earnings report is also important to watch, as a miss in the number could trigger risk-off sentiment and favor the dollar bulls.
Market Catalysts Today:
- US New House Sales
- Fed Speeches
- Nvidia’s earnings
USD/CAD Technical Forecast: Cup and handle pattern
The USD/CAD remains well-bid above the 30-period SMA on the 4-hour chart. However, the 14-period RSI suggests no bullish conviction, as the value is in the overbought zone. Smaller bullish candles also suggest the pair lacks the strength to continue the rally. The 1.4383 (horizontal level) could cap the gains.
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However, the pair is forming a cup and handle pattern, which is a strong bullish sign. If the pair finds acceptance above 1.4383, the next hurdle will be 1.4425 ahead of 1.4495. On the flip side, rejection from current levels could challenge the 1.4300 support ahead of 1.4233 (30-SMA) and then 1.4200.
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