USD/CAD: market participants are likely to prefer the US dollar on the eve of a long weekend

"Economic prospects have strengthened in recent months", Fed Chairman Jerome Powell said last week. "Some factors confirm that the prospects for fiscal policy are becoming more stimulating, the continuing growth of jobs contributes to income and trust, foreign growth has been on a strong trajectory and the financial conditions as a whole remain mild".

The dollar demonstrates a large-scale strengthening, which is caused by the successful advancement of negotiations between high-ranking representatives of the United States and China regarding trade relations between the two countries, expectations of further tightening of monetary policy in the US, and also by the continuing of receiving positive macro data from the US.

So, on Wednesday the US Commerce Department published data according to which GDP in the 4th quarter was better than forecast and rose by 2.9% (the previous release indicated GDP growth of 2.5%, and the forecast was + 2.7%). .

The report, published on Wednesday, also pointed to an increase in consumer spending in the 4th quarter, while investment by companies remained high. At the same time, investments in fixed assets of non-residents increased by 6.8% per annum. The growth leader was equipment costs, which grew by 11.6%.

President of the Federal Reserve Bank of Atlanta Rafael Bostic said on Wednesday that inflation is growing faster than some common indicators indicate, which gives the US central bank the opportunity to continue a gradual increase in interest rates.

On Thursday, the market is demonstrating the sluggish trading dynamics. Traders prefer not to open new positions before the long weekend in connection with the celebration of Catholic Easter.

It is likely that at the second half of the US session traders will also begin fixing long positions in the dollar, which will cause it to decline, unless, of course, the macro statistics published at 12:30 (GMT) on the US again surpass the market expectations and will not, therefore, support dollar. Among the data published at this time - indicators of personal income / expenditure, as well as the basic price index of personal consumption expenditure for February. The base price index is expected to grow by 1.6% (in annual terms) against + 1.5% in January. If the data is confirmed or will be better than the forecast, the dollar will resume growth.

Weak indicators will have a negative impact on the dollar and may become a trigger for closing long positions in the dollar.

Also at 12:30 (GMT) will be published data on Canada's GDP for January. Probably, GDP will grow by 0.1%, as well as in December. If the data prove to be better than the forecast, the Canadian currency will strengthen, including against the US dollar.

With all other unaccounted-for conditions, market participants are likely to prefer the US dollar on the eve of a long weekend. European stock exchanges will be closed from March 30 to April 2, although the work of the forex market will remain unchanged.

*)An advanced fundamental analysis is available on the Tifia Forex Broker website at tifia.com/analytics

Support levels: 1.2900, 1.2828, 1.2800, 1.2740, 1.2700, 1.2600, 1.2520, 1.2430, 1.2360, 1.2260, 1.2170, 1.2100, 1.2050

Resistance levels: 1.2917, 1.3000, 1.3100

Trading Scenarios

Sell ​​Stop 1.2890. Stop-Loss 1.2925. Take-Profit 1.2828, 1.2800, 1.2740, 1.2700

Buy Stop 1.2925. Stop-Loss 1.2890. Take-Profit 1.3000, 1.3100, 1.3200

*) For up-to-date and detailed analytics and news on the forex market visit Tifia Forex Broker website tifia.com