The Canadian dollar is back.
A month ago, it was thought that the Federal Reserve (Fed) would continue to raise the Bank of Canada’s 4.50% overnight rate to levels well above it. After that, bank runs destroyed global growth sentiment, and crude oil prices fell to their lowest levels. in a year.
Since the bank run stabilised, the market is increasingly convinced that the Fed has nearly completed its rate hike and OPEC has swooped in to recoup its oil losses.
This led to a sharp reversal in USD/CAD from 1.3862 on March 9 to 1.3338 today, a two-month low.
Can USD/CAD Continue Falling?
Technically, the pair will soon reach a series of historical lows from 1.3218 to 1.3273. If they don’t break, it will strengthen the high price pattern that has been going on for nearly two years. If it cracks, the double top below 1.40 is highlighted, confirming the measured target of 1.26.
To get there, we need to be more confident in our global growth and energy prospects. This could be attributed to further oil price hikes due to OPEC cuts, but it should meet rising global demand, especially from China.
Domestically, the Canadian housing market is at an inflection point as the spring property market rises. So far, prices have been doing well, but we are not confident that demand will continue. Homeowners are getting higher interest rates on their five-year mortgages every day, and more homes could hit the market.
At the moment, we are wary of further USD/CAD losses. Risk and Reward don’t advocate selling now as there is good support nearby, but I’m open to the idea that he sells at the 1.3200 break.
