USD/CAD: AMERICAN DOLLAR RETURNS TO CORRECTIVE DECLINE

Current trend

During the Asian session, the USD/CAD pair declines slightly, holding around 1.3583 and retreating from the highs of December 13, renewed last week.

Today, there will be the first of two planned speeches of the US Fed Chairman Jerome Powell in Congress. The market is counting on the emergence of new forecasts and plans by the regulator regarding a possible reduction in interest rates this year. At the beginning of the week, the head of the Federal Reserve Bank (FRB) of Atlanta, Raphael Bostic, said that there is no urgent need to switch to the “dovish” rhetoric since the economy is stable and the labor market remains strong, creating risks of keeping the consumer price index above the target level of 2.0%. The official also confirmed that borrowing costs could be adjusted no more than twice by 25 basis points by the end of the year, but more evidence of a sustained slowdown in inflation would be needed first.

On Wednesday, the Automatic Data Processing (ADP) company’s report on employment in the private sector for February will be published: the indicator is expected to increase from 107.0K to 150.0K. At the end of the week, the official statistics will appear: experts expect a change in nonfarm payrolls in the USA from 353.0K to 200.0K and in Canada – from 37.3K to 20.0K, as well as a slight increase in the unemployment rate from 5.7% to 5.8%.

In addition, today, there will be a meeting of the Bank of Canada on interest rates: analysts do not expect any changes in the indicator relative to the current 5.0%. However, there might be renewed forecasts regarding further actions of the regulator.

Support and resistance

On the daily chart, Bollinger bands are actively growing: the price range is expanding, letting the “bulls” renew local highs. The MACD indicator grows, maintaining a relatively strong buy signal (the histogram is above the signal line). Stochastic shows similar dynamics, but the indicator line is near the “80” mark, indicating that the US currency may become overbought in the ultra-short term.

Resistance levels: 1.3600, 1.3650, 1.3700, 1.3750.

Support levels: 1.3550, 1.3500, 1.3450, 1.3400.

Trading tips

Long positions may be opened after a breakout of 1.3600, with the target at 1.3700. Stop loss – 1.3550. Implementation time: 2–3 days.

Short positions may be opened after a rebound from 1.3600 and a breakdown of 1.3550, with the target at 1.3450. Stop loss – 1.3600.