The Fed Chair Yellen made a speech on 3rd Mar, stating that “We currently judge that it will be appropriate to gradually increase the federal funds rate if the economic data continue to come in about as we expect.” According to the CME FedWatch tool, the probability of a rate hike in March after her comment has jumped to 79.7%.
The dollar has rallied for the fifth straight day of gains since 24th Feb. As Yellen’s hawkish statement was in line with market expectations, as well as traders had priced in before the speech. After the speech, the dollar index has seen its biggest intra-day fall since 31st Jan due to profit-taking pressure.
USD/CAD has rallied with strong bullish momentum since 27th Feb, hitting a two-month high of 1.3435.
However, on the 4 hourly chart, the current price is trading below the major resistance level at 1.3400, where the pressure is heavy, the bullish momentum is likely to be restrained here.
The price has been moving from the upper band to the middle band by the Bollinger Band indicator, indicating the bullish momentum is waning.
The daily Stochastic Oscillator is above 80, suggesting a pull back.
The zone between 1.3350 – 1.3370 will likely provide some support, however if it is confirmed broken, the trend of USD/CAD will likely reverse.
The resistance level is at 1.3400, followed by 1.3415 and 1.3430.
The support line is at 1.3370, followed by 1.3350 and 1.3325.
The Minneapolis Fed chief, Kashkari, a voting member of the FOMC this year, will make a speech at 20:00 GMT today.