USD/CAD Daily Forecast – Bears Cheering as Oil Shatters 6-Week High

The Loonie pair continued to extend last day’s tumbling rally that had got triggered on testing the sturdy 1.3137 resistance. At around 03:00 GMT, the downtrend appeared to make an intermediate halt near 1.3049 support mark. This pivotal support point was last touched on July 7, allowing the pair to build a robust upward drift, reaching the monthly high.

Nevertheless, the rising Crude Oil prices might act as a strong barrier, confining pair’s positive movements. There is always an inverse relationship between the Oil prices and the USD/CAD pair.

On Thursday, the Crude Oil WTI Futures touched the six-week high ahead of a storm expected to become a hurricane by Friday in the Gulf of Mexico. Over such rising concerns, the US Oil Producers have cut one-third of their production out of that area. Declining US Crude Inventories also played a key role in lifting the commodity’s market value.

Influential Economic Events

The US June Consumer Price Index (CPI) and Unemployment data remain the main highlight in the economic docket.

This time, the market expects a slight increase in the Jobless Claims report. The Street analysts hope for a 0.53% growth in the Initial Jobless Claims 4-week average computed since July 5. Meantime, the market expects the Continuing Jobless Claims calculated since June 28 to remain in-line with the previous 1.686 million. Also, the consensus keeps a slightly bullish stance over the June MoM CPI data.

Above all, the June MoM CPI data that excludes Food & Energy report would create some good volatility in the pair’s daily movements. The Street estimates a 0.1% rise in the figures this time, reporting near 0.2%.

Later the day, Fed’s Chair Powell would continue to testify before the Congress, providing monetary policy stances.

Technical Analysis

2-Hour Chart

The Loonie pair was heading south after making a rebound action on hitting the strong 1.3143 resistance. Quite surprisingly, the 50-day and 100-day SMA, which helps in forecasting the near-term trend, appeared to move hand-in-hand.

At any point in time, the over-sold RSI would play its role, taking the pair upwards. If the pair makes a triumphant move above the aforementioned short-term SMAs, the significant 200-day SMA (near 1.3150 level) will get activated. Anyhow, the bulls would find difficulty in attaining a positive movement in the upcoming sessions, considering the barriers stalled overhead. On the flip side, various support points lie near 1.3044 and 1.3037 levels.

1-Day Chart

On a longer time frame, the Ichimoku Clouds kept hovering above the Loonie pair. This position develops a bearish stance for the pair’s future price actions. Also, the overhead base line and the conversion line confirms the negative trend.