USD CAD - May high update
The US dollar continues to strengthen due to the policy of the US Federal Reserve aimed at tightening the parameters of the national monetary policy, and USD CAD is trading around 1.2995.
Last week, the regulator decided to raise the interest rate by 75 basis points to 1.75%, as a result of which the US dollar strengthened against the Canadian currency and updated the May high at 1.3065. US Federal Reserve Chairman Jerome Powell confirmed the authorities’ readiness to fight the highest inflation in the last 40 years and said that the changes made will increase the attractiveness of the national currency and increase the number of transactions nominated in it. Also, the authorities will continue to monitor the global economic situation, and, if necessary, will again adjust the rate upward at the next meeting at the end of July.
Meanwhile, the Canadian dollar is declining following oil prices: WTI Crude Oil lost 7.7% last week and it looks like the negative dynamics will only intensify. Today, the General Administration of Customs of the People’s Republic of China presented a report that notes a record increase in imports of “black gold” from the Russian Federation: the figure reached 8.42 million tons, exceeding the April value by 25%, while the volume of supplied liquefied gas amounted to 400 thousand tons, which is 56% higher than in May last year. Analysts believe that the displacement of Saudi Arabia from the list of leaders among energy suppliers became possible against the backdrop of the implementation of the Russian authorities’ discount policy in the sale of oil.
The tightening of monetary conditions by the US Federal Reserve acts as a catalyst for the upward movement of the US dollar, as a result of which USD/CAD may rush to 1.3360 after the breakdown of the resistance level of 1.3065. Thus, there is a high probability that the trading instrument will continue to strengthen in the long term.
The long-term trend is upward. Last week, the May high was updated at 1.3065 and if the price fixes above it, the next buy target will be at 1.3157. Strong levels, from which new long positions can be considered, formed in the area of 1.2950 and 1.2860.
The mid-term trend changed to an uptrend last week, when the target zone 1 (1.2766 – 1.2745) was broken out and the target zone 2 (1.2985 – 1.2963) was reached, above which the traders will try to consolidate this week. If successful, the growth of the trading instrument will continue with the target in the area of the target zone 3 (1.3212 - 1.3189). The key trend support is shifting to the levels of 1.2856 – 1.2835.
Resistance levels: 1.3065, 1.3157, 1.336 | Support levels: 1.2950, 1.2860, 1.2525
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