USD/CAD Daily Forecast – Loonie Pair Under Pressure Due to Bearish USD and Oil

The Loonie pair continued to stumble on the back of falling Greenback and sliding Oil prices. The pair made the opening on Wednesday morning near 1.3392 levels. At around 07:00 GMT, the USD/CAD pair was trading near 1.3375 levels, 0.13% down.

Plunging Greenback Brings Down the Loonie Pair

Last day, Fed’s Chair Powell responded to the market over the rising concerns of an interest rate cut. Powell mentioned that the Central Bank would take the appropriate steps needed to sustain economic growth. Chairman also highlighted that once the decision gets implemented, the policymakers would have a close watch over the global cues. Powell added that the Bank would also ensure to maintain the 2% inflation rate at the same time. His comments read the likely chances of a rate cut if required.

Hence, the already down USD Index dropped from 97.30 levels to 97.03 levels. Furthermore, the Buck had touched the lowest point near 96.97 levels in the early morning session.

Crude Oil is the major export item in Canada. Any variation in the commodity prices has a direct impact on the Loonie. The Crude prices were trading lower since last few sessions amidst the rising trade tensions and Russian disagreement over OPEC-led supply cuts. Adding more Oil to the flame, the API Weekly Crude Oil Stock computed since May 31 came out last night. The Inventory reports recorded 3.545 Million over the previous -5.265 Million. The Crude prices dropped furthermore from $53.58 bbl to $52.83 bbl following the reports. The Commodity prices might continue to fall in the coming sessions, as the uncertain trade talks could prevail for long.

Events to Have a Close Watch

Upcoming US May ADP Employment Change and Markit PMI data could help the Greenback recover the previously incurred losses. Highly Significant ISM Non-Manufacturing PMI is something that traders must stay tuned at around 14:00 GMT.

Next catalyst for the Crude Prices are the EIA Crude Oil Stocks Change reports computed since May 31. The EIA reports are scheduled to report near 14:30 GMT.

Technical Analysis

The Loonie pair continued the downtrend in the Asian session. The pair had already surpassed the major support line near 1.3486 levels. The tumbling rally appears to stay sustained as the USD/CAD pair moves in the lower bracket of the Bollinger Bands. The pair stay well intact inside the lower vicinity of the Bands without tweaking the EMA even once. Next support to test is the 1.3435 levels which got last touched on May 22. The Relative Strength Index (RSI) indicated reduced levels below 20 marks. RSI indicator showcases a lack of interest among the trader community and a higher bias towards selling side. Recovery seems quite dubious for the USD/CAD pair in the near term from the technical side of the pair’s movements.