USD/CAD Report: On Friday, a number of events lead to sharp selling of USDCAD.

Nov 04, 2022

VOT Research Desk

Prior to 0.9820, EURUSD is encountering temporary resistance at 0.9800 (static level, psychological level) (200-period SMA on the four-hour chart, descending trend line).

In order to draw buyers, a four-hour close above the latter might be interpreted as a positive signal.

The pair may continue to strengthen its rebound toward 0.9860 (100-period SMA) and 0.9900 if the Relative Strength Index (RSI) indicator goes above 50 in response to such a development (psychological level).

On the downside, 0.9700 (a psychological level, static level) appears to have formed short-term support before 0.9630. (Oct. 13 low ). Investors are still worried that China’s zero-COVID policy and the ongoing recession in the United States, the world’s largest consumer of oil, will reduce demand for fuel.

This might prevent the commodity from seeing any significant gains. In addition, the Federal Reserve’s more hawkish posture should continue to support the dollar and restrict the downside for the USDCAD pair. In fact, Fed Chair Jerome Powell warned on Wednesday that talking about a break in the rate-hiking cycle was premature.

Powell also stated that the terminal rate will remain higher than expected, which benefits those who are bullish on the US dollar and continues to maintain the current high US Treasury bond yields.

The release of monthly employment data from the US and Canada, which is scheduled for later during the early North American session, may also be preferred by traders.

The USD/oil price dynamics continue to control spot prices, which for the time being appear to have broken a six-day winning streak and erased a large portion of their weekly gains.