USD/CAD Depreciates Due to Weakening Yields and the Dollar

USD/CAD depreciates in erratic trading as oil prices rise and Canadian data remains strong. The USD declined, while benchmark rates decreased by several basis points. Investors are selling bonds in response to fears about rising prices and dwindling economic growth prospects.

Despite the Federal Reserve's aggressive monetary stance, gold prices remained unchanged as benchmark yields fell. Oil prices increased as a result of a supply constraint in the United States and a lack of supply from Russia and Libya. Reduced demand and rising inflation indicate that the economy will remain in stagflation.

Existing house sales decreased by 2.7 percent from March 2021 to 5.77 million seasonally adjusted yearly units. March house sales were down 4.5 percent from the previous month. The data were taken in January and February, just when mortgage rates began to climb, before exploding in March. Prices are increasing as a result of the housing shortage, which increases the cost of dwellings. This condition makes it more difficult for homebuyers to obtain mortgages.

Technical Evaluation

After three days of consolidation, the USD/CAD experienced intense selling today, plunging below the critical psychological threshold of 1.25. Long-term, rising commodity prices will support the Loonie. Resistance is located near the 1.26 ten-day moving average. Support is located near the low set on April 4th, near 1.247.

Short-term momentum shifted negative as the fast stochastic crossed below the zero line, signaling a sell signal. Momentum is bullish but decelerating over the medium term, as the MACD line generated a crossover buy signal. When the MACD line (the 12-day moving average minus the 26-day moving average) passes the MACD signal line, this scenario occurs (the 9-day MA of the MACD line).