We are pleased to bring you the latest edition of the series produced by our colleagues in RBC Capital Markets, hosted by George Davis, CMT, the award winning Chief Technical Analyst for Fixed Income and Currency Strategy. In this installment, George comments on the geo-economic and geo-political issues that have lead to a volatile start to 2026.
The resulting increase in uncertainty has impacted various asset classes, such as a sharp correction in both commodity prices and bitcoin, a spike higher in US yields and a pair of shorter term corrections in US equity markets. This has led to downward pressure on the USD as confidence in the currency decreases. Of note, the USD index recently pierced a 15-year support trendline, dating back to 2011, pointing to a significant shift in sentiment. Further, a break below the January low at 1.3482 would add to bearish momentum for USDCAD bringing support levels from September 2024 and January 2024 into play.
For the month ahead, George sees a trading range of 1.3450 to 1.3950, with sellers looking towards 1.3700 and above as an entry point, while moves toward 1.3400 would be attractive for buyers.