USD/CAD Daily Price Forecast – Hawkish Fed Update Helped USD Regain Upper Hand against CAD

The USD/CAD pair caught some strong bids on Thursday and rallied back closer to the 1.3050 immediate hurdle, recovering losses recorded in the previous two trading sessions. The pair managed to find decent support near the 100-day SMA, with resurgent US Dollar demand prompting some aggressive short-covering move and helping the pair to snap four consecutive days of losing streak. Minutes of the Federal Reserve’s August meeting signaled broad support for another interest-rate hike in September and helped stall the recent USD sell-off which was further aggravated by the latest US political drama. As of writing this article, USDCAD pair is trading at 1.3045 up 0.38% on the day.

Worse Than Expected Canadian Macro Data Helped USD Gain Upper Hand

Adding to this, fresh US-China trade-war fears provided an additional boost to the buck and further collaborated to the pair’s goodish rebound on Thursday. Trade tensions between the world’s two largest economies escalated further after both, the US and China implemented 25% tariffs on $16 billion worth of the imports from either side. Meanwhile, a mildly softer tone around crude oil prices undermined demand for the commodity-linked currency – Loonie and remained supportive of the pair’s strong bid tone through the early European session.

On the release front yesterday, aside from FOMC update, US markets saw release of existing home sales data which was a disappointment, however weekly crude oil inventory data was better than expected while other minor data which came for the day were well in line with expectations. On Canadian calendar retail sales data was a disappointment which added strength to dollar bulls on their uptrend movement. Today’s calendar has no major release in Canadian market side while US calendar will see release of initial jobless claims and new home sales data. Today’s momentum for the pair is expected to come from USD drivers.

It, however, remains to be seen if the pair is able to build on the positive momentum or continues with the struggle to make it through the 1.3055-50 region, an important horizontal support break-point, now turned strong resistance. On a sustained move beyond the mentioned barrier, the pair is likely to dart towards reclaiming the 1.3100 handle en-route the next major hurdle near the 1.3135 zone. On the flip side, the key 1.30 psychological mark now seems to protect the immediate downside and is closely followed by 100-day SMA support near the 1.2985 region.