Ella 
USD/CAD posted its third consecutive day of gains on Monday, with Asia moving higher towards 1.3540. The U.S. dollar (USD) is likely to be supported by expectations that the Federal Reserve (Fed) will stick to higher interest rates to combat inflation, which could further mitigate the sharp decline in USD/CAD. The Fed will also update its dot-plot forecasts, outlining its expected interest rate policy over the next one to five years.
Meanwhile, the U.S. dollar index is trying to remain in bullish territory, hovering around 103.50 at press time. However, U.S. bond yields have retreated, putting the U.S. dollar under significant downward pressure. The two-year Treasury yield and the 10-year Treasury yield currently stand at 4.72% and 4.30%, respectively.
On the other hand, the Canadian dollar (CAD) may find some support from the surge in crude oil prices. WTI oil prices continue to climb, reaching nearly $80.90 per barrel at press time. Increasing geopolitical risks have led to market concerns about crude oil supply disruptions, driving upward momentum in crude oil prices.
Traders may be waiting to see Canada’s consumer price index due out on Tuesday. Consumer prices are expected to rise at an annual rate in February. If inflation picks up, that could lead to a bullish move for the Canadian dollar. In addition, the U.S. manufacturing purchasing managers index will be released on Thursday.
