USD/CAD Daily Fundamental Forecast – January 24, 2018

The USDCAD pair finally managed to choose a a direction and fell hard over the past 24 hours. The pair had been consolidating and ranging for quite some time between the 1.24 and the 1.25 regions and we had also said that it was unlikely that the pair would break out of its range anytime soon. But the dollar fell hard all across the board over the last 24 hours and this is led the pair lower.

USDCAD Breaks Lower

The pair broke through the lows of its range and fell through the 1.24 region during this period and looks set to weaken further as the dollar is clearly on the backfoot. The dollar is getting beaten as the fears of trade protectionist policies from the US has gripped the markets. The restrictions imposed on the imported solar panels in the US has increased these fears and has also led many to believe that we could be in for a global trade war with the other major trading countries also following suit.

The CAD remains steady as the oil prices have pushed higher during this period. We believe that the CAD would get much stronger in the short and medium term as well as the incoming data from Canada continues to be strong and with a hawkish central bank overseeing the economy, they are bound to do well in long run. That is the reason why we are seeing any kind of bounce being sold into, in this pair and this is likely to continue.

Looking ahead to the rest of the day, we do not have any major news from the US or Canada but the bearish stance in the dollar is here to stay which would keep pushing the pair lower in the long run. Traders would do well to trade with stop losses and not get carried away by the bearish trend.