USD/CAD Exchange Rate Prediction – The Dollar Fails to Rally Despite Rising Treasury Yields

The dollar attempted to move higher against the Loonie on Friday but was met with resistance. Despite higher U.S. Treasury yields, the greenback was unable to gain traction. The yield differential is moving in favor of the U.S. currency, but it has difficulty making headway. During the week, the U.S. data was mixed. Despite softer than expected PMI and Jobless claim data released on Thursday, the Fed’s message that they will begin to taper bond purchases by the end of the year. The market is now pricing in a 25-basis point hike by September of 2022 and a 50% chance of a second hike by December 2022. Higher yields will help buoy the dollar, which should eventually weigh on the yellow metal.

Technical Analysis

The dollar eased against the Loonie and was unable to gain traction following the Fed Decision. The exchange rate was unable to recapture resistant near the 10-day moving average at 1.2711 and is poised to test targets support near the 50-day moving average at 1.2615. The exchange moved from the overbought territory as the fast stochastic generated a crossover sell signal. Medium-term momentum has turned negative the MACD (moving average convergence divergence) index generated a crossover sell signal. The MACD histogram is printing in negative territory with a rising trajectory which points to a higher exchange rate.

This article was originally posted on FX Empire

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