Published on May 22, 2023

Daily Analysis For USD/CAD 22-05-2023

USD/CAD Analysis

Economic Events and Scenario for USD/CAD

Economic Events : -

GMT	Event	Impact	Currency
00:50	(Japan) Machinery Orders YoY	Medium	JPY
00:50	(Japan) Machinery Orders MoM	Medium	JPY
01:00	(Canada) Victoria Day	None	CAD
01:00	(Montenegro) Independence Day	None	EUR
02:15	(China) Loan Prime Rate 1Y	Medium	CNY
02:15	(China) Loan Prime Rate 5Y	Medium	CNY
05:30	(Netherlands) Consumer Confidence	Medium	EUR
06:00	(Estonia) PPI YoY	Low	EUR
06:00	(Estonia) PPI MoM	Low	EUR
07:30	(Switzerland) Industrial Production YoY	Medium	CHF
08:00	(Slovakia) Current Account	Low	EUR
09:00	(Greece) Current Account	Low	EUR
09:00	(Australia) Myfxbook AUDUSD Sentiment	Medium	AUD
09:00	(Switzerland) Myfxbook USDCHF Sentiment	Medium	CHF
09:00	(Japan) Myfxbook USDJPY Sentiment	Medium	JPY
09:00	(European Union) Myfxbook EURUSD Sentiment	Medium	EUR
09:00	(United Kingdom) Myfxbook GBPUSD Sentiment	Medium	GBP
09:00	(Canada) Myfxbook USDCAD Sentiment	Medium	CAD
09:00	(New Zealand) Myfxbook NZDUSD Sentiment	Medium	NZD
10:00	(Belgium) Consumer Confidence	Low	EUR
10:00	(Euro Area) Construction Output YoY	Low	EUR
10:45	(European Union) EU Bond Auction	Low	EUR
11:00	(Ireland) Wholesale Prices MoM	Low	EUR
11:00	(Ireland) Wholesale Prices YoY	Low	EUR
11:00	(Luxembourg) Unemployment Rate	Low	EUR
11:30	(Portugal) Current Account	Low	EUR
13:00	(Kosovo) Balance of Trade	Low	EUR
13:30	(United States) Fed Bullard Speech	Medium	USD
14:00	(France) 3-Month BTF Auction	Low	EUR
14:00	(France) 12-Month BTF Auction	Low	EUR
14:00	(France) 6-Month BTF Auction	Low	EUR
15:00	(Euro Area) Consumer Confidence	Medium	EUR
15:50	(United States) Fed Barkin Speech	Medium	USD
15:50	(United States) Fed Bostic Speech	Medium	USD
16:30	(United States) 3-Month Bill Auction	Low	USD
16:30	(United States) 6-Month Bill Auction	Low	USD
20:00	(El Salvador) Balance of Trade	Low	USD

Today's Scenario: - USD/CAD is gaining strength from its intraday low as bearish momentum fails to sustain the first daily decline in three days. The pair found support at the 100-day moving average during the early Monday session.

The recent rebound in USD/CAD could be attributed to the weaker performance of WTI crude oil, which is Canada's main export. Crude oil prices have declined for the third consecutive day, with a 1.0% drop to around $71.15 at the moment. This decline aligns with expectations of increased oil production and concerns about slower economic growth. The US Energy Information Agency (EIA) stated in its monthly report that US crude oil production grew by 5.6% in 2022 compared to 2021, averaging 11.9 million barrels per day (bpd). The EIA highlighted increased production in the Permian region and the Federal Offshore Gulf of Mexico as the main drivers of this growth.

Meanwhile, the US Dollar Index (DXY) is trading around 103.00 after retracing from a two-month high reached the previous day. The index reflects the performance of the US dollar against six major currencies and is currently benefiting from cautious optimism regarding US policymakers' ability to address the debt ceiling issue, despite the recent failure of talks.

Buy Scenario: - On the upside, a daily close above the 100-DMA resistance at 1.3510 would not be enough to encourage bullish momentum, as a downward-sloping resistance line from March, around 1.3550, is likely to pose a significant challenge for buyers.

If USD/CAD manages to sustain gains above 1.3550, there is a possibility of a gradual ascent towards the previous monthly low around 1.3665.

Overall, USD/CAD is expected to trade sideways, but the bears have had the upper hand in recent times. Till we do not advise to buy USD/CAD.

Sell Scenario: - USD/CAD is trading near its intraday low around 1.3490 in early Monday trading in Europe. The pair's recent price action, including a Doji candlestick on Friday, a stable RSI (14) line, and bullish MACD signals, supports a sideways movement.

As a result, USD/CAD is expected to remain range-bound between the 100-day moving average (DMA) and the 200-DMA, which are located around 1.3510 and 1.3480, respectively.

If the pair breaks below the 1.3480 level, it may further strengthen the bearish bias, with a key support level found around a two-week-old upward-sloping trendline near 1.3475.

Subsequently, USD/CAD could decline towards the psychological level of 1.3400 and potentially reach the yearly low around 1.3300. Till we do not advise to sell USD/CAD.

Support and Resistance Level: -