Home USD/CAD Outlook: Dollar’s Winning Streak Extends to Fifth Week

USD/CAD Outlook: Dollar’s Winning Streak Extends to Fifth Week

  • Investors expect that US interest rates will remain elevated.
  • Most members of the Fed rate-setting committee still perceive “significant upside risks to inflation.”
  • There was a decline in the count of new claims for US unemployment benefits.

Today’s USD/CAD outlook is bullish. The dollar was on track for its fifth consecutive week of gains against major rivals. This marks its longest winning streak in 15 months.

Are you interested in learning more about making money with forex? Check our detailed guide-

Notably, the rise was driven by expectations that US interest rates would remain elevated. Additionally, there was a shift towards safer assets due to concerns surrounding China’s economy. However, on Friday, the dollar reduced these gains slightly. 

Meanwhile, the Federal Reserve’s recent meeting minutes came out on Thursday. They revealed that most members of the rate-setting committee still perceived “significant upside risks to inflation.” This indicates a leaning toward further rate hikes.

Moreover, robust economic data, particularly in retail sales, had already reinforced the argument for additional tightening measures.

These factors combined pushed 10-year Treasury yields to their highest level since October, reaching 4.328% on Thursday. “Although the market desires the Fed to pause, the available data does not support that sentiment,” remarked Tony Sycamore, an analyst at IG.

“The US dollar has benefited perfectly from the risk aversion, higher yields, and resilient economic data,” he continued.

Elsewhere, the US Labor Department disclosed a decline in the count of new claims for unemployment benefits submitted by Americans during the previous week. This decrease hinted at the persistence of a tight job market. Consequently, this might extend the Federal Reserve’s efforts to implement measures that dampen economic growth.

USD/CAD key events today

Investors are not awaiting any key economic reports from the US or Canada, so the pair will likely consolidate.

USD/CAD technical outlook: Bullish momentum suggests price could reach 1.3600 soon.

USD/CAD technical outlook
USD/CAD 4-hour chart

USD/CAD is bullish on the charts, with the pair trading above the 30-SMA and the RSI above 50. The RSI has supported solid bullish momentum since the trend began by staying above 50. 

Are you interested in learning more about MT5 brokers? Check our detailed guide-

At the same time, the price has repeatedly respected the 30-SMA as support, bouncing higher every time it pulls back to the level. Currently, the price trades with the nearest support at 1.3500 and the nearest resistance at 1.3600. Given the bullish bias, the price will likely soon rise to 1.3600.

Looking to trade forex now? Invest at eToro!

68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money

Saqib Iqbal

Saqib Iqbal

Saqib Iqbal is a market analyst, prop fund trader and mentor, serving the industry with his analysis and educational content since 2011. The author has great exposure to different financial markets and institutions. He's well-known for his day trading reviews and multiple timeframe analysis.