- The US dollar/CAD tests the immediate barrier at the psychological level of 1.4400.
- The bullish bias lasts, as the relative strength index remains for 14 days above 50 marks.
- Immediate support appears in the lower boundaries of the canal channel, near the 1.4350 mark.
The pair of the dollar/CAD maintains its location two consecutive days after the gains, and is trading approximately 1,4400 during the Asian session on Wednesday. On the daily chart, the husband is within an upward channel, indicating a prevailing upward trend.
The relative strength index hovers for 14 days (RSI) over the 50th mark, indicating a continuous positive momentum. The consistent RSI above 50 would support the bullish feelings.
In addition, the USD/CAD pair is slightly higher than the average automatic moving averages for nine and 14 days (EMAS), which enhances the upward trend and suggests strong prices in the short term. This alignment reflects the interest of strong purchase and hints when more bullish trend can be made.
On the upper side, the US dollar/dollar pair tests the psychological level of 1.4400 and is placed to challenge 1.4518 – the highest level since March 2020, which was achieved on January 21. Another resistance is expected near the upper boundaries of the emerging canal, about 1.4840.
The immediate support in EMA lies for nine days at 1.4380, followed by the EMA for 14 days at 1.4377. This level coincides with the lower boundaries of the emerging canal, near the 1.4350 brand, providing a strong support area.
USD/CAD: Daily Chart
Questions and answers in Canadian dollars
The main factors that pay the Canadian dollar (CAD) are the level of interest rates set by Canada Bank (BOC), the price of oil, the largest export in Canada, the health of its economy, inflation and commercial balance, which is the difference between the value of Canada’s exports in exchange for its imports. Other factors include market morale-if investors are eating more risky assets (risk) or searching for safe materials (risk)-with positive CAD risks. As its largest commercial partner, the health of the American economy is also a major factor that affects the Canadian dollar.
Canada Bank (BOC) has a major impact on the Canadian dollar by determining the level of interest rates that banks can persuade each other. This affects the level of interest rates for everyone. The main goal of BOC is to keep inflation by 1-3 % by setting interest rates up or down. Relatively higher interest rates tend to be positive for CAD. Canada Bank can also use quantitative dilution and tighten it to influence credit conditions, with previous CAD negative and the other positive CAD.
The price of oil is a major factor that affects the value of the Canadian dollar. Petroleum is the largest export in Canada, so the price of oil tends to an immediate effect on the CAD value. In general, if the price of oil rises, the CAD rises, with the increased total demand for the currency. The opposite is the case if the price of oil decreases. The high oil prices also tend to increase the possibility of a positive commercial balance, which also supports CAD.
While inflation was always believed to be a negative factor of the currency because it reduces the value of money, the opposite was already the case in the modern era with the relaxation of capitalist controls across the border. Top inflation tends to lead the central banks to raise interest rates that attract more capital flows from global investors looking for a profitable place to keep their money. This increases the demand for the local currency, which in the case of Canada is the Canadian dollar.
Victory of macroeconomic data evaluates the health of the economy and can have an impact on the Canadian dollar. Indicators such as GDP, manufacturing, PMIS, employment services, and consumer morale surveys can affect CAD direction. The strong economy is useful for the Canadian dollar. Not only attracts more foreign investments, but it may encourage Canada Bank to set interest rates, which leads to a stronger currency. If economic data is weak, CAD is likely to fall.