US Dollar Forecast: USD/CAD on Cusp of Testing 2022 High
US Dollar Outlook: USD/CAD
USD/CAD is on the cusp of testing the 2022 high (1.3978) as it pushes above the opening range for November, but lack of momentum to extend the recent series of higher highs and lows may keep the Relative Strength Index (RSI) out of overbought territory.
US Dollar Forecast: USD/CAD on Cusp of Testing 2022 High
Unlike the price action from October, the RSI holds below 70 even as USD/CAD registers a fresh yearly high (1.3968), and the oscillator may show the bullish momentum abating as it appears to be diverging with price.
As a result, USD/CAD may struggle to retain the advance from the start of the week, but the update to the US Consumer Price Index (CPI) may keep the exchange rate afloat as the report is anticipated to show persistent inflation.
US Economic Calendar
The headline CPI is expected to increase to 2.6% in October from 2.4% per annum the month prior, while the core rate of inflation is anticipated to hold steady at 3.3% during the same period.
In turn, signs of sticky price growth may put pressure on the Federal Reserve to unwind its restrictive policy at a slower place, and the update may generate a bullish reaction in the US Dollar as it undermines speculation for another rate-cut at the Fed’s last meeting for 2024.
With that said, USD/CAD may attempt to test the 2022 high (1.3978) as it stages a three-day rally, but a softer-than-expected CPI report may curb the recent advance in the exchange rate as it fuels expectations for lower US interest rates.
USD/CAD Price Chart – Daily
Chart Prepared by David Song, Strategist; USD/CAD Price on TradingView
- USD/CAD extends the advance from the start of the week to register a fresh yearly high (1.3968), with a break/close above the 1.3970 (61.8% Fibonacci extension) to 1.4000 (61.8% Fibonacci extension) region opening up the 1.4040 (23.6% Fibonacci retracement) to 1.4080 (78.6% Fibonacci extension) zone.
- Next area of interest comes in around the May 2022 high (1.4173) but USD/CAD may struggle to extend the recent series of higher highs and lows should it fail to push above the 2022 high (1.3978).
- Lack of momentum to hold above 1.3900 (50% Fibonacci extension0 may push USD/CAD back towards the 1.3810 (161.8% Fibonacci extension) to 1.3850 (50% Fibonacci extension) zone, with the next region of interest coming in around 1.3700 (38.2% Fibonacci extension).
Additional Market Outlooks
US Consumer Price Index (CPI) Preview (OCT 2024)
GBP/USD Outlook Hinges on Break of Monthly Opening Range
US Dollar Forecast: USD/JPY Defends Post-US Election Rally
US Dollar Forecast: EUR/USD Opening Range in Focus Ahead of US CPI
--- Written by David Song, Senior Strategist
Follow on Twitter at @DavidJSong
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.cityindex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.
ALL TRADING INVOLVES RISKS. LOSSES CAN EXCEED DEPOSITS.
City Index is a trading name of StoneX Financial Pte. Ltd. (“SFP”) for the offering of dealing services in Contracts for Differences (“CFD”). SFP holds a Capital Markets Services Licence issued by the Monetary Authority of Singapore for Dealing in Exchange-Traded Derivatives Contracts, Over-the-Counter Derivatives Contracts, and Spot Foreign Exchange Contracts for the Purposes of Leveraged Foreign Exchange Trading. SFP is also both Derivatives Trading and Clearing member of the Singapore Exchange (“SGX”). SFP is a wholly-owned subsidiary of StoneX Group Inc.
The information provided herein is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to invest, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.
The information does not represent an offer of, or solicitation for, a transaction in any investment product. Any views and opinions expressed may be changed without an update. To understand the risks and costs involved, please visit the section captioned “Important Information” and the “Risk Disclosure Statement”.
The information herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.
StoneX Financial Pte. Ltd. 1 Raffles Place, #18-61, One Raffles Place Tower 2, Singapore 048616. Tel: 6309 1000. Co. Reg. No.: 201130598R.
This advertisement has not been reviewed by the Monetary Authority of Singapore.
© City Index 2024