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  • The world’s financial markets have regained some stability.
  • Traders remain alert for any new banking system vulnerabilities.
  • Canada presented a budget aimed at luring investment in the low-carbon economy.

Today’s USD/CAD price analysis is bearish. After two days of losses, the safe-haven US dollar continued to lag on Wednesday as the world’s financial markets regained stability. There are increased hopes of averting a full-blown banking catastrophe. Moreover, the recovery in oil prices seems supportive for the Canadian dollar. 

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Nevertheless, traders remain alert for any new banking system vulnerabilities.

On Tuesday, the Canadian dollar rose to a three-week high against the American currency as demand for safe-haven assets decreased.

In contrast, the safe-haven US dollar dropped against a basket of major currencies as the appetite for riskier currencies grew. US crude oil futures ended the day higher, adding to sharp gains the day before.

Investors had been concerned that the financial crisis might trigger a severe credit crunch if it persisted. This would worsen the economy’s outlook and lower oil demand, one of Canada’s main exports.

Canada on Tuesday sought to catch up to the United States in terms of competitiveness with a budget aimed at luring investment in the low-carbon economy. It included tax incentives for electric-vehicle (EV) makers and expanding the electricity grid.

After eight interest rate increases in the previous year, inflation is still above 5%, and growth and a “shallow” recession are anticipated this year. Finance minister Freeland frequently stated that she did not want to make the central bank’s work more difficult and that the budget would be fiscally prudent.

Additionally, investors look forward to Deputy Governor Toni Gravelle’s Wednesday address from the Bank of Canada.

USD/CAD key events today

Investors will receive important data from the US, including the pending home sales report and the crude oil inventories report. The report on crude oil will show the level of demand for oil in the US.

USD/CAD technical price analysis: Bears breaking key level

USD/CAD technical price analysis

The 4-hour chart shows USD/CAD trading far below the 30-SMA and the RSI well under the 50-mark. The current move is bearish with strong momentum. Bears had been stopped more than once at the 1.3650 support. 

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When the price finally broke below this level, it made a lower low and high, confirming a bearish trend. The price has paused at the 1.3600 support, where it might consolidate or pull back before the downtrend continues.

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