USD/CAD Overview
USD/CAD has experienced a decline for the second day in a row, hovering around 1.4200 during the Asian trading session on Wednesday. Analyzing the daily chart, it seems the price is still within an ascending channel, indicating that the bullish tendency is ongoing.
The USD/CAD pair maintains a positive outlook, remaining above the 50-day Exponential Moving Average (EMA). However, it faces a slight limitation from the shorter-term nine-day EMA. The 14-day Relative Strength Index (RSI) has eased to 58.5, reflecting solid but not overwhelming upward momentum after prior overbought conditions.
There’s a chance that USD/CAD could test the immediate resistance at the nine-day EMA of 1.4221. Following that, the 18-month high of 1.4298, noted on October 9, may come into play. If the price successfully breaks above this level, it could reach the upper trendline of the ascending channel near 1.4410, and eventually approach the psychological mark of 1.4500.
On the flip side, the pair might dip to the vicinity of the lower trendline of the ascending channel around 1.4130, and after that, the 50-day EMA at 1.4066 could be tested.
Analysts at Scotiabank characterize the current short-term technical picture for USD/CAD as “bullish/neutral.” They highlight that the RSI’s movement into the mid-60s signifies a clear decrease in bullish momentum following a rally in September that pushed the RSI up to 80, well into overbought territory (70). This moderation in momentum is seen as an important signal, suggesting that the earlier aggressive upward phase may be slowing, even though the overall technical perspective remains positive.
Fed’s Collins Maintains Hawkish Tone Despite Data Caution
The recent speech by Fed’s Collins has scored a 7.1 on the FXS Speechtracker, slightly above the historical average of 6.7, which suggests a somewhat more hawkish position compared to previous patterns. Notably, the focus was on the “elevated risk of high inflation,” with expectations that inflation rates will stay above 2% due to rising energy prices. Collins also showed strong support for the September rate hike, reinforcing a tendency toward stricter policy, despite framing the future direction as reliant on data and characterizing the job market as balanced and robust.
Further remarks about ongoing economic growth, employment stability, and inflationary pressures hint that the Fed may prefer to maintain a restrictive stance longer to combat persistent pricing risks, while depending on a steady labor market and consumer spending to absorb this approach.
The FXS Fed Sentiment Index decreased by 2.23 points to 131.63, reflecting a slight retreat in perceived hawkishness compared to previous measurements. Nonetheless, the index remains significantly higher than the neutral threshold of 100, indicating the Fed’s overall posture remains firmly hawkish, even with this slight softening noted in the FXS Fed Sentiment Index in relation to the tone shown by the FXS Speechtracker.
