USD/CAD Breakout Gathers Pace as US Rates Take Over
The USD/CAD exchange rate has seen significant gains over the past fortnight, breaking above its key medium- and long-term moving averages. This bullish trend has been driven by a strong correlation between daily changes in USD/CAD and US two-year yields, which has risen to around +0.74.
According to recent data, the pair's sensitivity to shifts in US front-end rates has surged, particularly over the past week. The relationship between fluctuations in crude prices and movements in longer-dated US Treasury yields and the DXY is also worth noting.
The current trend may be at risk of reversing if the price deviates from the 50% retracement level of 1.3991. This level has been respected on several occasions over recent months, making it a crucial point to watch for potential setups in USD/CAD.