USD/CAD Daily Forecast – Powell’s Rate Cut Response in Focus

Opening Pattern Worth Noticing in USD/CAD Chart

The Loonie pair had started trading on Tuesday morning near 1.3439 levels. There appeared a “Spinning Top” candle in the middle of the earlier morning range. It confirms the current indecision among the USD/CAD traders, and hence the price range may continue to head sideways.

Fundamental Overview

With the rising tensions around the bilingual trade dispute between the Superpowers, the Loonie seems to suffer. Canada depends mostly on exports with the US and China as the primary buyers. However, trade activities of both Washington and Beijing have gone down over the period, pulling down the Loonie.

Greenback has started giving up its safe-haven position and top 98 levels since last week. Rising recession fears driven out of increasing 3M-10Y Yield difference and trade tensions remained the main two plunging rationales. Previous day’s poor May Manufacturing PMI figures added an extra push to the Index’s downfall movement.

Meanwhile, Crude WTI was trading near $53.01 bbl in the Asian session. The Oil prices continued to remain under pressure amid a global economic sluggishness and OPEC-led supply cuts. The commodity stayed at the bottom without much volatility in the early hours.

Events that Need a Closer Look

Source: CNBC

The market stays highly convinced over a Fed rate cut as imminent seeing the negative growing Yield Curve. Today, Fed’s Chair Powell will respond on the same market concern. Traders must stay tuned to the Chairman’s words as those can have a significant impact on the overall global economy.

To keep track of the Oil price movement, API Weekly Crude Oil Stock data computed since May 31 is noteworthy. The reports have recorded -5.265 million last time.

Technical Analysis

1-Hour Chart

The main trend in the pair movements remains a bearish trend. The pair hovers within the lower bracket of the Bollinger Bands (BB), confirming the sustained downtrend. USD/CAD pair had remained consolidated in the early hours but was showing signs of heading south. The pair were attempting to test the robust 1.3429 support lines. If broken, the pair would witness the next support force near 1.3357 levels.

Adding to the negative sentiment, the significant Simple Moving Averages (SMA) hovered well above the pair. Notably, the 50-days and 100-days SMA was overhead the most significant 200-days SMA. This position reveals an intensified bearish stance in the near period over the longer one.

1-Day Chart

The picture appears slighter bright in the long term with the help of Ichimoku Cloud analysis. The USD/CAD pair was traveling above the Green Ichimoku Clouds, alluding bullish trend. However, the trend lack confirmation as the base line and the conversion line got recently slaughtered with massive red candlesticks. Hence, from the 1-Day Chart, the call is neutral/bullish.