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USD/CAD Price Analysis: Recovery move to near 1.3700 looks vulnerable as US Inflation decelerates

  • The recovery move from USD/CAD to near 1.3700 seems to lack confidence amid the risk-on mood.
  • Softening US inflation is favoring a continuation of a lower pace by the Fed in hiking rates further.
  • The 20-period EMA at 1.3710 might continue to act as a barricade for the US Dollar.

The USD/CAD pair has delivered a less-confident rebound move after dropping to near 1.3650. The Loonie asset seems vulnerable near 1.3700 as a deceleration in the United States inflation is indicating a further decline in appeal for safe-haven assets after the Silicon Valley Bank (SVB) collapse.

S&P500 futures have discovered some losses in the early Asian session as Moody’s Investors Service has cut its view on the entire banking system to negative from stable, as reported by CNBC. The situation is portraying a minor pessimism in the overall risk-on mood.

Softening US inflation is favoring a continuation of a lower pace by the Federal Reserve (Fed) in hiking rates further. Fed chair Jerome Powell should be in no hurry in further policy-tightening as the US inflation is declining according to the directed plans.

USD/CAD has rebounded after sensing a cushion near the horizontal support plotted from March 01 high at 1.3659 on a two-hour scale. The recovery move by the US Dollar seems to lack confidence and strength, which bolsters the odds of further downside in the asset.

The 20-period Exponential Moving Average (EMA) at 1.3710 might continue to act as a barricade for the US Dollar.

Meanwhile, the Relative Strength Index (RSI) (14) has defended the downside move into the bearish range of 20.00-40.00. However, the downside bias is still intact.

A decisive breakdown of March 14 low at 1.3652 would drag the loonie asset toward March 07 low at 1.3600, followed by March 03 low at 1.3555.

In an alternate scenario, a confident recovery above March 14 high at 1.3750 would drive the major toward March 13 high above 1.3800 and March 09 high at 1.3835.

USD/CAD two-hour chart

 

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