Loonie Rises On Bright Economic Outlook

Fundamental Analysis

* Loonie Comeback: The Canadian Dollar has surged against the dollar and other currency pairs as recent positive data release from Canada renewed confidence in Canada’s economic future, dampening expectations of immediate interest rate cuts by the Bank of Canada. In January, the Canadian Gross Domestic Product (GDP) saw growth surpassing expectations, expanding at the strongest rate in a year of 0.6%. This positive outcome exceeded forecasts of a 0.4% increase, marking a significant rebound from the 0.1% contraction experienced in December. This is a significant shift for the Canadian economy, narrowly avoiding a technical recession in the latter half of 2023, marking a notable reversal in its trajectory.

Technical Analysis

* Technical Breakout: USD/CAD was traded lower following recent breakout below the previous support level 1.35550. MACD which illustrate bearish momentum signal with bearish market structure breakout suggest pair to extend further its downward pressure.

* Resistance and Targets: If the bearish momentum persists, there’s a strong likelihood that the price will fall towards the subsequent level 1.34600. However, the price may also potentially experience a short-term technical correction and rebound back towards the level 1.35550.

Understand how technical analysis can help you in this trading opportunity.

Potential Risks

Moving forward, investors will remain focused on upcoming data release from the Canada to gauge the economic outlook. Besides that, market will also look towards U.S and Fed on the direction for monetary policy outlook as Fed Governor Christopher Waller warned that there is no rush to start cutting rates, which has poured some cold water on the market consensus of three rate cuts in 2024.

Know how to manage trading risks with risk management strategies.

Monitoring

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

Grab the trading opportunity and dive into the action risk-free with a free demo account. It is the perfect way to hone your skills and explore the exciting world of trading!

Open Your Free Demo Account And Start Trading

Create Demo Account

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.