USD/CAD Daily Price Forecast – USD/CAD Rangebound Ahead Of FOMC Update

The USDCAD pair on Friday saw a sharp upside price action for the majority of the day supported by weak crude oil price in the broad market. However, in the late North American market hours, the 10-year government bond yields declined resulting in US Dollar suffering a sharp sell-off in the global market. This was visible in Dollar index which declined from intra-day highs. Further, Crude oil price rebounded from intra-day lows and saw consolidative price action which caused the pair to decline from intra-day highs albeit closing on a positive note for the day. The pair resumed positive price action when the trading session opened for the week today but saw a sharp fall during the Asian market hours owing to a weak US dollar in the broad market.

Crude Oil Price Had Little Impact On Price Action Today

As investor sentiment was highly influenced by dovish expectations for FOMC forward guidance from the meeting scheduled to occur later this week, USD suffered sharp loss and went well near Friday’s lows. Weak Crude oil price in Asian market hours did little to stop the decline. But US T.Yields saw slight upward action in European market hours resulting in the pair regaining upward price action. However, cues from OPEC’s production cut enforcement and Venezuelan supply disruptions helped spot crude oil price recover from intra-day decline and establish rangebound price action with a positive bias. This limited USD’s bulls from staging a strong upside move despite USD recovering from early decline.

Given the lack of major macro data updates in both Canadian and US economic calendar during today’s and upcoming trading session, investor focus is now on US Fed interest rate meeting update scheduled to occur on Wednesday. Ahead of US Fed meeting and interest rate update, the price action of the USD/CAD pair is likely to be dictated by headlines surrounding crude oil price action and broad-based sentiment surrounding US Dollar. Given dovish Fed members speech and disappointing US macro data in recent past, analysts expect that Feds will continue to display dovish tone in upcoming meet and comment on the possibility of rate cuts if macro data updates from the US continue to disappoint. This has caused investors to hold back from placing any major bets and reduced chance for a breakout in either direction suggesting that price action in immediate and near future will see range bound pattern trapped within 1.325 to 1.3400 handle.

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