USD/CAD Daily Forecast – Pair Gaining Traction Ahead of BoC Rate Decision

The USD/CAD pair had displayed a slight elevation last day, jumping from 1.3103 level to 1.3133 level. From that point until today morning, the pair had not shown any signs of upward/downward drifts. Today, the Loonie pair marked the day’s opening near 1.3128 level and continued to remain sustained within 1.3121/36 range level.

Changes in the Crude Oil prices always have an inverse impact on the pair’s daily movements. The Oil prices made a 1.34% upshot last night undermined strong API Weekly Crude data release. This Stocks Change report had showcased -8.129 million over the last -5.000 million.

“Prices are finely balanced right now as investors await fresh stimulus which could come in the form of a sharp change in U.S. crude oil inventories,” said Fawad Razaqzada, technical analyst at FOREX.com.

Significant Economic Events

Yesterday, the CAD had lost ground ahead of the Bank of Canada (BoC) Interest rate decision scheduled for today. The Street analysts expect the Bank to keep the rates unchanged at 1.75%. However, the market participants feel a bit suspicious over such estimates as the Fed prepares to ease its monetary stance later this month. Meantime, the BoC monetary policymakers quoted that the current sluggishness in the overall economy is a temporary effect and would soon catch recovery. The BoC would announce its decision over the rates at around 14:00 GMT.

In the same time frame, the Fed’s Chair Powell would testify before the US Congress on Wednesday and Thursday. The market is willing to have a rate cut, despite lack of data urging for one. So, later the day, Powell’s testimony would remain the key item in the Investor’s watch list.

At 14:30 GMT, the Energy Information Administration (EIA) would come up with the Crude Stocks Change report computed since July 5. The market stay bullish over the report, expecting -3.567 million over the previous -1.085 million.

Technical Analysis

The Loonie pair was trading well above the major counter trendlines. The pair had broken these counter trendlines on July 8. Such a price action shows the resilient nature of the USD/CAD bulls. Since yesterday, the bulls are making rigorous efforts to breach the sturdy 1.3142 resistance. However, it feels as if the bulls lacked the required energy to make a break-through amid the aforementioned upper barrier.

Meanwhile, the pair hovered above the 50-day EMA, calling for uptrend continuity in the near-term. However, if at all the pair makes a triumphant march above 1.3142 resistance, then it would activate the 100-day and 200-day EMA confluence. Also, the Relative Strength Index (RSI) indicated around 59 level, revealing an increase in the demand side.