Usdcad Crosses Resistance

Usdcad Crosses Resistance by Ashly Chole last updated on November 23, 2023

USD/CAD Crosses 1.3700 As Greenback Gains Strength

USD/CAD (US Dollar/Canadian Dollar) is on an upward trajectory after touching a low of 1.3660 and has already crossed the 1.3700 resistance zone. The recent upside in the USD/CAD is attributed to the rebound in the DXY, which found buying momentum near 105.4.

According to experts, investors are favoring the greenback and the US bond yields over other currencies as they await important economic data from the US side. This has allowed the DYX (USD index) to turn higher, as it is now trading near the 106.00 level. In addition, the 10-Y bond yields are now hovering at the 5.86%.

The S&P 500 futures are also in green as the market's risk appetite recovers, which is also a good sign for the USD/CAD pairs.

Interest Rate Policy Will Remain Unchanged

Now, investors are awaiting Jerome Powell's speech that's scheduled to happen in the next few months. The market expects the Fed chair to reiterate the same old policy of keeping the interest rate policy unchanged at high levels.

In addition, if the data from the US economy remains good, the chances of further tightening by the Fed will increase manifolds.

Another important data from the US side will be October's PMI reading, which is expected to drop down to 49.5 against the 49.8 reading of September. Furthermore, the services PMI of the USA will also go down to 49.9 from an earlier reading of 50.1.

If the US PMI for October turns out to be better than the forecast, the USD/CAD will receive a boost and will likely touch new resistance.

If we look at the Canadian side, the main event is the BoC's interest rate decision likely to happen tomorrow. The market believes that the 5% interest rate in Canada will not change as the country's economy is facing a depressed demand along with various other economic problems.

But if the BoC gives a surprise rate hike at the upcoming meeting, the USD/CAD will turn lower as a sign of Canadian Dollar strength.