USD/CAD Outlook:
- USD/CAD bears gain traction after breaking below 1.365.
- US Dollar takes strain as US regulators come under scrutiny.
- Canadian Dollar strengthens, pushing prices toward 1.3600.
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USD/CAD Breaks Support as the Senate Banking Committee Scrutinizes US Regulations
USD/CAD has fallen below the tight range of support and resistance, that formed around 1.365 earlier today. After breaking below the prior level of support, the rebound in oil prices stalled, muting the Canadian Dollar.
Although the takeover deal between First Citizens Bank and SVB temporarily calmed fears over the stability of the banking sector, regional and smaller banks remain a concern. This comes at a time when regulatory officials from the Federal Reserve, Federal Insurance Corporation (FDIC) and Treasury Department are forced to testify before the congressional committee.
While US authorities and the FDIC have committed to providing liquidity to larger financial institutions, there is still uncertainty around how other lenders have been impacted by recent events.
As market participants continue to price in developments in the fundamental backdrop, the US Dollar has failed to regain confidence against its major counterparts.
USD/CAD Technical Analysis
At the time of writing, USD/CAD is trading below another key level of technical significance, holding around 1.365. With a zone of confluency forming between 1.3600 and 1.370, the narrow range remains critical for the short and medium-term move.
At DailyFX, we have a dedicated support and resistance page showing areas of support and resistance for popular markets
After a steep drop from the March high, the 1.3700 psychological level (coinciding with the 20-day MA) provided temporary support before stepping in as resistance, which currently remains intact.
USD/CAD Daily Chart
Chart prepared by Tammy Da Costa using TradingView
If bears manage to gain traction and break support, a retest of 1.3600 is possible, with the next level of Fibonacci support (78.6% retracement of the 2011 – 2016 move) coming into play at 1.356.
--- Written by Tammy Da Costa, Analyst for DailyFX.com
Contact and follow Tammy on Twitter: @Tams707
