USD/CAD Daily Price Forecast – Consolidative Action Continues For Second Consecutive SessionUSD holds steady near its previous session gains but positive crude oil price supports Canadian Loonie preventing sharp upside move.
The USDCAD pair yesterday managed to move back above 1.3100 handle during American market hours. This up move was backed by dollar’s strength in broad market and Dollar received further support over boost in 10-Yr U.S. Treasury bond yields. However, U.S. Dollar was unable to capitalize on positive price action as the latest FOMC update from U.S. Fed hinted at dovish forecast which continues to limit any strong upside move in favor of US Dollar. Following positive price action in U.S. market hours, the pair entered consolidative action during Asian market hours owing to holiday thin liquidity. The pair is yet to see breakout as both sides have an equally positive influence.
Positive Crude Oil Price Rally Helped Limit USD’s Gains
Risk appetite is high in the market today and this has caused the pair to move in zig-zag pattern during Asian and European market hours. U.S. Dollar is continuing to trade positively in the global Forex market for the fourth consecutive trading session today. And in today’s rally, U.S. Dollar is further supported by upbeat U.S. T.Yields and this continues to provide a great deal of fundamental support to Greenback bulls which has helped it remain steady above 1.31 handle. Meanwhile Crude oil price in spot market continues to test resistance at $55 handle and this provides strong support to Canadian Dollar. As Crude oil traded positive, Loonie bulls grappled for momentum which kept the pair highly volatile across the day. As of writing this article, USDCAD pair is trading at 1.3144 up by 0.26% on the day.
Investors now look forward to macro data updates scheduled to release later in the day for meaningful trading opportunities. On release front today, US markets will see the release of ISM Non-Manufacturing PMI, Markit Composite, and Services PMI data updates, while Canadian calendar will see the release of trade balance data. A better than expected outcome in macro data updates will help US dollar aim for mid 1.31 handle while disappointing outcome will result in continued range bound action for a second consecutive trading session. When looking from a technical perspective, the pair has momentum indicators in the hourly chart also signal the possibility for further upward price action. A breach and sustained price action above mid 1.35 handle is now required for US Dollar to retain ongoing positive price rally on a long term outlook.