USD/CAD slides under 1.2800 amid an upbeat market as oil rises

• The US dollar is under heavy selling pressure, down some 0.55% against the Loonie.
• The Fed hawkish monetary policy decision was seen as a “buy the rumor, sell the fact” event, as shown by US equities at all-time highs.
• USD/CAD Technical Outlook: A double-top in the daily chart looms with a target of 1.2400.

After a spike towards 1.2937 on Wednesday, the USD/CAD grinds lower during the New York session, trading at 1.2770 at the time of writing. The market sentiment has improved as witnessed by European equities rising, while stock indices fluctuate between gainers and losers on the US.

On Wednesday, the Federal Reserve unveiled its monetary policy meeting, where policymakers decided to increase the bond taper speed, eyeing March of 2022 as the end of the coronavirus-pandemic stimulus. Further, it released the dot-plot, a part of its Summary of Economic Projections (SEP), which depicts that the board members’ median expects at least three rate hikes in 2022, in line with market participants’ expectations.

That said, the Federal Reserve monetary policy decision turned to a “buy the rumor, sell the fact event,” with equities rallying to all-time-highs post-Fed. At the same time, risk-sensitive currencies like the GBP, the CAD, and the antipodeans climbed against the greenback. 

In the meantime, Western Texas Intermediate (WTI) irises some 1.60%, trading at $72.85, a tailwind for the oil-linked Canadian dollar. 

The US 10 year Treasury yield is down almost three basis points, sitting at 1.433%, a headwind for the greenback, with the US Dollar Index, which measures the buck’s performance against a basket of six rivals, slips 0.42%, currently at 96.10.

In the US economic docket, the Initial Jobless Claims for the week ending on December 11 rose to 206K, more than the 200K, a tick higher than the previous one. Concerning Continuous Claims, fell to 1.845M, from 1.999 on the week previous, and better than the 1.934M estimated. 

Further, US Housing Starts rose to 11.8% yearly based, while Building Permits increased by 3.6%.

USD/CAD Price Forecast: Technical outlook

USD/CAD Wednesday’s upward move faced strong resistance at the August 20 high at 1.2948, then retreated the move to close below the December 3 high at 1.2853. That said, as shown by the daily chart, it formed a double-top chart pattern with bearish implications. 

However, to confirm its validity would need a sustained break under 1.2605, which will target a move towards the October 23 high at 1.2400.