USD/CAD Daily Price Forecast – Rebound in Crude Oil Price Drags Down USD/CAD From Intra-Day High’sRebounding oil prices underpinned Loonie and collaborated towards capping gains while traders await US ADP report/ISM manufacturing PMI for some fresh impetus.
The USD/CAD pair trimmed a part of its early strong gains but has still managed to hold its neck comfortably above the 1.3600 handle. After yesterday’s late pull-back, the pair caught some fresh bids on Thursday and moved back within striking distance of 19-month tops set earlier this week, albeit remained capped below the 1.3660 supply zone. With European equity market showing some initial signs of stability, a modest US Dollar retracement was seen as one of the key factors keeping a lid on any strong follow-through for the major. This coupled with a goodish rebound in crude oil prices, now trading with modest daily gains, extended some additional support to the commodity-linked currency – Loonie and further collaborated towards capping gains.
Pair To Remain Highly Volatile on News Filled Schedule
Moving ahead investors are cautious as they await headlines on new congress which is expected to swear into power later today in US and headlines which suggest change in political climate in US will put a bid under greenback boosting its value in broad market. Investors focus is also on US ADP NFP and ISM manufacturing data scheduled to release today followed by US NFP data and speech from Fed Chair Jerome Powell to gain clues on Fed’s stance over medium to long term outlook of US Greenback. Market is also on lookout for impact of OPEC’s production and supply cut on supply-demand dynamics of crude oil in broad market. The news filled market is expected to influence highly volatile price action of rest of trading session for the week.
When looking from technical perspective, the pair’s post-Christmas attempted up-moves struggled to make it through the 1.3660 supply zone, though bulls have managed to defend 200-hour SMA. The range-bound price action, forming a rectangular chart pattern, might still be categorized as a consolidation phase that marks a pause in the bullish trend. Although seen as a continuation pattern, rectangle sometimes also mark significant trend tops or bottoms and is not complete until a breakout has occurred. Hence, it would be prudent to wait for a convincing breakthrough the above-mentioned barrier before traders start positioning for a fresh leg of an up-move. Meanwhile, the downside remains protected by 200-hour SMA, which is followed by the lower end of the recent trading range, around the 1.3570-65 region a break below which will prompt some aggressive long-unwinding trade in the near-term.