USD/CAD Daily Fundamental Forecast – February 21, 2018

The dollar got a lot of love from the bulls yesterday though the reasons for the same have not been very apparent. The market does not care for reasons and the traders buy or sell based on the momentum and the wind and the momentum was clearly on the side of the dollar bulls yesterday as they blew through resistances in many of the pairs and this effect was seen in the USDCAD pair as well.

USDCAD Pushes Higher

The pair has been trading in a steady and buoyant manner for much of the day over the last 24 hour and it has helped the pair to push through the 1.26 region and now it trades comfortably above that region as of this writing. The move higher has been helped by the bullishness in the dollar which returned after a gap of a few days. The fact that the oil prices weakened during this period also pushed the CAD on the backfoot and helped the move higher in the pair which now threatens to assume dangerous proportions as far as the bears are concerned.

There was no specific fundamental or economic news to push the dollar higher but we had been warning about this change of trend for sometime now. There was no violence involved in the move higher and it has been more like a slow and steady move during this period. The market also waits in anticipation of the FOMC meeting minutes that would be released late in the US session and we expect a lot of volatility surrounding the release.

The market would be watching for clear signals of the rate hike in March, which is widely expected, and also look for signs of when the future rate hikes would be. The market would be happy to see an indications of a fourth rate hike this year but we doubt whether the Fed would be inclined to indicate that at this point of time. We believe that the pair should see some volatility surrounding this news and if the Fed is hawkish, we should see the pair heading towards the 1.28 region.