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USD/CAD Daily Forecast – Rising Oil Prices Amid US-Iran Tensions Pushing the Pair Down

By:
Nikhil Khandelwal
Updated: Jun 21, 2019, 08:34 UTC

The Oil prices continued to hold on the monthly gains lingering near $57.75 bbl amid the rising Middle East tensions and hopes over a Fed rate cut. On the longer timescale, the pair appeared to maintain a downtrend clinching near the 4-month bottom.

iranian flag on broken wall and half usa united states of america flag

After touching the bottom near 1.3150 marks, the Loonie pair had risen slightly over Greenback upliftment yesterday. The USD Index had made a minor upward move last day amid impressive Jobless data release. Anyhow, the USD/CAD pair failed to breach the healthy 1.3221 resistance levels and reverted. The pair continued to move along the lower bracket near 1.3160/80 range levels in the Asian session.

Rising Crude prices remained the primary negative trendsetter for the plunging USD/CAD pair. The commodity prices had dropped around 1.52% in the early hours today. Despite that, the Oil prices continued to hold on the monthly gains lingering near $57.75 bbl.

Crude 240 Min 21 June 2019
Crude 240 Min 21 June 2019

The Crude is the biggest export item for Canada. Hence, any changes in the Oil prices have an inverse impact on the USD/CAD pair. The Crude gained value amid the rising Middle East tensions and hopes over a Fed rate cut. Yesterday, Iran had downed a US drone that strayed into the Iranian airspace. The drone was brought down using a “Third of Khordad” – a surface-to-air missile. This incident marks as the first of its kind where Iran claims in-charge of the attacks. The US President had initially called Iran’s action as a “big mistake”. Somehow, Trump appeared to downplay as per latest reports. President told reporters that he finds it “hard to believe it was intentional”.

The escalating tensions in the Middle East region that contributes around 20% of the Global Oil Production kept the Oil prices high. Also, the US Dollar appeared to lose value further bestowing Crude price upsurge.

USD/CAD Influential Events

Ahead of the day, Loonie traders await the Canadian April MoM Retail Sales reports. The market seems to stay highly bearish over the Retail figures,  expecting a 0.9% decrease this time.

On the USD side, the June Markit Services PMI and May Home Sales data line up in the economic docket. The Street analysts anticipate a slight growth in both these reports.

Crude prices might show volatility after the data release of the Baker Hughes US Oil Rig Count. This Crude reports had recorded 788 figures in previous time.

Technical Analysis

1-Hour Chart

USDCAD 60 Min 21 June 2019
USDCAD 60 Min 21 June 2019

The 50-days short term trend indicating SMA was heading south in the Asian session. The short term SMA had already crossed paths with the other two significant 100-days and 200-days SMA. Such a movement approaching the pair alludes a reversal at any point in time. Nevertheless, all the SMA stood well above the USD/CAD pair, calling a downtrend. The MACD showcased the histograms pointing north and both the moving averages tending to move upwards. On further downward movement, the pair would find strong support near 1.3153 levels.

1-Day Chart

USDCAD 1 Day 21 June 2019
USDCAD 1 Day 21 June 2019

On the longer timescale, the pair appeared to maintain a downtrend clinching near the 4-month bottom. If the negative trend continues, then the pair might rebound from the robust 1.3114 support levels. Also, the overhead SMA confirmed the bearish trend in the pair’s future movements.

 

About the Author

Nik has extensive experience as an Analyst, Trader and Financial Consultant for Global Capital Markets. His vision is to generate Highest, Consistent and Sustained Risk-Adjusted Returns for clients over long term basis and providing them world-class investment advisory services.

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