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USD/CAD Daily Price Forecast – USD/CAD Continues Range Bound Movement on Weak US Greenback

Colin First

The largest risk to the outlook for the Canadian Dollar is the outcome regarding NAFTA. With a touted deadline of October 1st, the headline risk for USDCAD is high and will likely dictate near term price action for the pair. Recent rhetoric has been somewhat positive with source reports signaling that Canada were willing to provide key concessions in order to reach an agreement, consequently the Loonie has firmed in recent trading sessions. Given the firm data out of Canada, the BOC has signaled that their willingness to raise rates in the short term. Alongside this, recent comments from Deputy Governor Wilkins were on the hawkish side with the rate setter discussing whether to remove its “gradual approach” from its current rate guidance. If indeed an agreement is reached, this could potentially see markets reprise a steeper rate path from the BOC.

US Macro Data Update To Set Course For Near Term Price Action

As of writing this article, the USDCAD pair is trading flat at 1.2994 down by 0.02% on the day. The USD/CAD pair struggled to register any meaningful recovery and remained within striking distance of two-week lows, set in the previous session. The US Dollar extended its weakening trend, triggered by softer US consumer inflation figures, and remained on the defensive through the early European session today. This coupled with a positive tone around crude oil prices underpinned the commodity-linked currency – Loonie and further collaborated towards keeping a lid on any attempted recovery. The pair lacked any firm directional bias and has been oscillating within a narrow trading range around the key 1.30 psychological mark as the focus now shifts to the US economic docket, highlighting the release of monthly retail sales data.

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This coupled with the prelim UOM US consumer sentiment index might produce some meaningful trading opportunities on the last trading day of the week. Immediate resistance is pegged near overnight swing high, around the 1.3025 area, above which the pair is likely to aim back towards testing 50-day SMA near the 1.3080 region. On the flip side, bulls might try and defend monthly lows support near the 1.2975 zone, which if broken might turn the pair vulnerable to extend the downfall towards the 1.2900 handle en-route the very important 200-day SMA support near the 1.2865 region.

 

This article was originally posted on FX Empire

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