- USD/CAD falls sharply after Powell’s speech that left a cautious tone on economic performance.
- US dollar sees a broader fall after Powell’s speech at Jackson Hole Symposium.
- Technically the USD/CAD pair remains supported by the 1.2600 mark and 200-SMA.
The USD/CAD price reversed sharply from 1.2700 to 1.2600 following Fed Chairman Powell’s Jackson Hole speech. In response to his words, the US dollar depreciated widely.
The Federal Reserve may begin phasing out its stimulus program this year, according to Powell. “A clear step has been made” towards the Fed’s goal of removing incentives, he said.
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During the current week, the DXY index has fallen to around 92.70, the stock market rebounded, and US yields declined. The price of XAU/USD tested $ 1,800 an ounce, leading to a significant rally in metals.
The USD/CAD pair is about to hit 1.2600 after the falling dollar placed pressure on the pair. It is possible for bears to dominate further as the market absorbs the cautious tone of Powell. After 1.2600, support rests at 1.2580, followed by 1.2550.
Federal Reserve Chairman Jerome Powell discussed the central bank’s forthcoming plans to begin rolling back its accommodative monetary policy later this year. He also explained why he thinks the recent spike in inflation will subside over time.
According to Powell on Friday, assuming the economy moves as expected, a $120 billion cut in monthly asset purchases this year might be worthwhile if the economy moves as a whole.
Following this meeting, Powell will address the economy in a message to be delivered at 4:00 pm on Friday. The latest economic news includes a strong July employment report and the spreading of the delta variant of the Covid-19 virus. Mr. Powell presented a commentary at the Kansas City Federal Reserve’s virtual symposium.
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USD/CAD price technical analysis: Bears found rejection at 1.2600
The USD/CAD price fell towards the 1.2600 area below the 50-period and 20-period SMAs. Although the pair found some support near th round number, the outlook has turned negative. The 4-hour price bar has too high volume. The close of the bar will determine the next fate. However, the price remains supported by the 200-period SMA around 1.2570-80.
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Saqib Iqbal
