USDCAD pair has been trading range bound since market opened for the day. Volatility around the pair is low even when considering holiday season owing to ongoing geo-political issues that has caused investors to take on cautious stance and limit any possibility of major chance in price action during year end trading sessions. January 2019 is going to experience unusually high volatility for start of year regardless of which direction price activity in equity and forex markets may take as key political and economic issues are to be addressed and are expected to be resolved. The pair’s price action is currently influenced by USD price dynamics and US greenback is currently suffering lack of demand owing to partial government shutdown in US and T.Yield curve inversion which hints at slowdown in economic growth.
Canadian Markets Closed For The Day
Three such major events that will affect the price action in Loonie are OPEC’s production/supply cut, new congress swearing in on January 3rd 2019 and finally Sino-U.S. trade talks – the outcome of which will greatly impact demand for crude oil in broad market and any change in Crude oil market will directly influence Loonie’s movement in broad market owing to being commodity linked currency. As of writing this article, USDCAD pair is trading flat at 1.3601 up by 0.06% on the day. Canadian market is closed for the day and US calendar doesn’t have any major high impact data release scheduled for the day which suggests range bound price action is to continue during today’s market hours.
This holiday season is set to see dovish price action dominate in all key markets as trading session comes to close for the year. Owing to lack of volatility amid holiday season the price action hasn’t deviated much from Monday’s path which suggests that short term outlook remains unchanged in technical perspective. The pair recently traded as high as 1.3617 and later corrected lower. It declined below 1.3600 and the 23.6% Fib retracement level of the recent leg from the 1.3512 low to 1.3613 high. However, there are many barriers for sellers near the 1.3580 level and a bullish trend line on the hourly chart. Therefore, the pair is likely to resume it upward move above 1.3610 and it could even break the 1.3630 resistance. On the downside, an initial support is at 1.3588, below which the pair could decline towards the 1.3565 support one and the 50 SMA.
This article was originally posted on FX Empire
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