USD/CAD Dips Amid Dovish Fed Signals and Oil Price Rebound

USD/CAD Dips Amid Dovish Fed Signals and Oil Price Rebound

The USD/CAD pair is experiencing a second consecutive day of losses in the Asian session on Monday. The decline is attributed to a weaker US Dollar (USD) and lower US Treasury bond yields, with the pair holding near 1.3705, down 0.07% on the day.

Last week, Federal Reserve (Fed) officials, including Boston Fed President Susan Collins and Fed President Austan Goolsbee, maintained a patient approach to interest rate moves, emphasizing a commitment to addressing inflation without harming the labor market. Market sentiment suggests the Fed might ease monetary policy in May 2024, marking the end of the hiking cycle.

The Bank of Canada (BoC) signaled the potential end of historically low-interest rates, warning of higher borrowing costs for households and businesses. Additionally, a rebound in oil prices, considering Canada's position as a leading oil exporter to the US, could contribute to a stronger Loonie.

From a technical standpoint, the USD/CAD is currently trading near the 61.8% Fibonacci level, suggesting a potential recovery in the pair. Our analysis leans towards a long setup, anticipating a bounce back to the upper side of the chart.

Our preference

Long positions above 1.3654 with targets at 1.3740 & 1.3770 in extension.

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