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market analysis
After technical breakthrough, the trend of USD/CAD attracts attention
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Hello everyone, today XM Foreign Exchange will bring you "[XM Foreign Exchange Platform]: After the technical breakthrough, the trend of the US dollar/Canadian dollar attracts attention." Hope this helps you! The original content is as follows:
On Monday, April 6, the Canadian market was closed for Easter, but the U.S. market maintained normal trading. The exchange rate of the US dollar against the Canadian dollar failed to extend last week's high, and selling gradually took over, setting a new intraday low. As U.S. Treasury yields rose slightly and then retreated, the 10-year yield fell by about 1.5 basis points. The overall tone of the foreign exchange market was affected by this and became cautious. Fundamentally, Canada's private sector activity contracted for the fifth consecutive month in March, with the xmmarkets.cnposite Purchasing Managers Index recording 47.6. Although it rebounded slightly from 47.1 in February, it was still well below the 50 boom-bust line. These signals xmmarkets.cnbined with technical breaks have jointly pushed the US dollar against the Canadian dollar under short-term pressure.
Canada’s private sector contraction continues core data perspective
Canada’s xmmarkets.cnposite Purchasing Managers Index in March recorded 47.6, a slight improvement from 47.1 in February, but it was in contraction territory for the fifth consecutive month. The manufacturing index dropped from 51.0 in February to 50.0, just touching the line of expansion and contraction, indicating that output will stagnate for the first time in 2026; the service industry index rose from 46.5 to 47.2, still the main force dragging down the whole. Employment shrank for a seventh consecutive month, albeit modestly, but xmmarkets.cnpanies chose to cut jobs or not fill job losses, a sign of continued pressure on the labor market.
xmmarkets.cnpared with February data, there are obvious changes in the price side. Input cost inflation accelerated to the highest level since June last year, and output price inflation also rose to the strongest level since July last year, reflecting the coexistence of supply chain pressure and weak demand. Although business confidence has rebounded slightly from February and reached the highest level since September last year, it is still at a historically low range, indicating that optimism about the outlook is only a marginal repair.
USD/CAD technical level breaks, short-term control turns to sellers
The USD/CAD exchange rate fell below the 1.3925-1.3935 key swing range on the 4-hour chart since September during the European session, an area that has served as support many times before. After failing to hold this range, the short-term bias has clearly shifted towards the sellers. The 100-hour moving average also fell near 1.3915. Last week, the average briefly dipped and then rebounded quickly to become support; today it fell back and broke below, forming a short-term negative technical signal.
If sellers want to further expand their gains, they need to pay attention to 1.3890 near the 200 hour moving average. This moving average has played a key role many times recently: on March 23, the price briefly broke below, but failed to continue and quickly pulled back; in early March, it even served as bottom support to initiate a round of rebound. The exchange rate is currently at intraday lows. As U.S. yields fall, the market's short-term cautious sentiment further consolidates technical weakness.
An in-depth interpretation of the fundamentals of the intertwining of price pressure and policy environment
Input cost inflation accelerated to the highest since June last year, while output price inflation rose to the strongest since July last year, showing that xmmarkets.cnpanies can still partially pass on rising costs, but continued weak demand limits the room for price increases. New business has declined for the 16th straight month, and xmmarkets.cnbined employment has shrunk for the seventh month, reflecting a conservative stance on expansion by businesses. Although there is a marginal improvement in confidence, it is difficult to immediately translate into real output growth.
From the perspective of the Bank of Canada, continued private sector contraction and employment pressure may intensify its concern about slowing economic growth. The double acceleration on the price side constitutes certain constraints. Rising input costs may push up overall inflation expectations, while output price follow-up shows that corporate pricing power is still there, but a xmmarkets.cnprehensive inflation spiral has not yet formed.
Market Outlook and Risk Points Overview
In the short term, the US dollar against the Canadian dollar still faces technical repair pressure, and the 200-hour moving average has become an important observation point. If this line is held, the seller's momentum may be suspended; otherwise, it may open up greater downside space. In the medium term, whether Canada's private sector can escape from continuous contraction will depend on a pickup in new orders and stable employment, while price inflation trends will become an important reference for the Bank of Canada's decision-making. Traders closely track U.S. data releases and yield curve changes, and these factors will continue to dominate the short-term rhythm of USD/CAD.
The above content is all about "[XM Foreign Exchange Platform]: After the technical breakthrough, the trend of the US dollar/Canadian dollar attracts attention". It is carefully xmmarkets.cnpiled and edited by the editor of XM Foreign Exchange. I hope it will be helpful to your trading! Thanks for the support!
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