US Dollar Forecast: USD/CAD Selloff Eyes March Low
US Dollar Outlook: USD/CAD
USD/CAD slips below the 50-Day SMA (1.3512) as it tumbles to a fresh weekly low (1.3478), and the exchange rate may continue to give back the advance from the March low (1.3420) as it struggles to hold within the ascending channel from earlier this year.
US Dollar Forecast: USD/CAD Selloff Eyes March Low
USD/CAD appears to be under pressure after failing to test the December high (1.3620) during the previous month, but the exchange rate may hold within the March range as the Federal Reserve and Bank of Canada (BoC) carry out a data dependent approach in managing monetary policy.
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In turn, speculation surrounding Fed and BoC policy may sway USD/CAD as both central banks seem to be at the end of their hiking-cycle, and the employment reports coming out of the US and Canada may produce increased volatility in the exchange rate as job growth is expected to persist in March.
US Economic Calendar
US Non-Farm Payrolls (NFP) are projected to increase 200K while Canada Employment is anticipated to rise 25.0K during the same period, and it remains to be seen if the developments will sway the Fed and BoC as Chairman Jerome Powell does ‘not expect that it will be appropriate to lower our policy rate until we have greater confidence that inflation is moving sustainably down toward 2 percent.’
Canada Economic Calendar
In turn, USD/CAD may face range bound conditions ahead of the BoC meeting on April 10 especially as the central bank appears to be on track to retain the current policy, and Governor Tiff Macklem and Co. may offer little hints of an imminent change in regime as ‘the Bank continues to expect inflation to remain close to 3% during the first half of this year before gradually easing.’
With that said, the employment reports coming out of the US and Canada may sway USD/CAD ahead of the BoC meeting, but recent price action may lead to a test of the March low (1.3420) as the exchange rate struggles to hold within the ascending channel from earlier this year.
USD/CAD Price Chart –Daily
Chart Prepared by David Song, Strategist; USD/CAD Price on TradingView
- USD/CAD slips below the 50-Day SMA (1.3512) as it trades to a fresh weekly low (1.3478), and the exchange rate may no longer respond to the positive slope in the moving average as it struggles to hold within the ascending channel from earlier this year.
- A breach below 1.3440 (23.6% Fibonacci retracement) may lead to a test of the March low (1.3420), with the next area of interest coming in around the February low (1.3366).
- Nevertheless, USD/CAD may face rang bound conditions if it continues to hold above 1.3440 (23.6% Fibonacci retracement), with a move above the monthly high (1.3589) bringing the March high (1.3614) on the radar.
Additional Market Outlooks
US Dollar Forecast: EUR/USD Bounces Back Ahead of February Low
US Dollar Forecast: AUD/USD Attempts to Defend March Low
--- Written by David Song, Strategist
Follow on Twitter at @DavidJSong
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