Loonie Weakens Ahead Of GDP, Oil Price Weigh.

Fundamental Analysis

* Loonie Lull: The Canadian dollar, which had been trading against both the U.S. dollar and other currencies, experienced a drop. This was due to a slight recovery in the U.S. dollar and a decrease in oil prices, both contributing to the currency’s decline. On U.S front, Federal Reserve officials, including Fed Governor Michelle Bowman, expressed a lack of urgency in reducing interest rates. Bowman highlighted “upside risks” to inflation. Additionally, Neel Kashkari, President of the Minneapolis Fed, suggested the possibility of no rate cuts occurring throughout the year. The Federal Reserve’s stance of maintaining higher interest rates for an extended period is boosting the Greenback. Meanwhile, the continued decline in oil prices could put downward pressure on the Canadian dollar, given that Canada is the largest exporter of crude oil to the United States.

Technical Analysis

* Technical Breakout: USD/CAD was traded higher following prior rebound from the level 1.36650. MACD which illustrate ongoing bullish momentum signal suggest the pair to further extend its gains.

* Resistance and Targets: If the bullish momentum persists, there’s a strong likelihood that the price will potentially head towards 1.3725. Conversely, a breach back above the level 1.36650 would suggest a reversal and potentially head towards 1.36150 level.

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Potential Risks

Moving ahead, investors will closely monitor the February Gross Domestic Product (GDP) growth figures for Canada, seeking insights into the performance of the Canadian economy. If the report reveals weaker-than-anticipated data, it could prompt the Bank of Canada (BoC) to consider interest rate cuts sooner, which may exert downward pressure on the Canadian dollar. Additionally, attention will shift to the Federal Open Market Committee’s (FOMC) interest rate decision scheduled for Wednesday.

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Monitoring

Stay updated on US and Canada data, Fed and BoC related updates and any shifts in the US Dollar’s strength by following PU Prime’s market insights and daily financial news.

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Disclaimer: Trading derivatives involves high risks, and market conditions can change rapidly. The content is for informational purposes only and should not be considered as financial advice. Traders should conduct their own research and consider risk management strategies.