USD/CAD Daily Price Forecast – Upside Move Influenced By Upbeat US T.Yields

The USDCAD pair last Friday traded rangebound with a bearish bias for a majority of the day as positive Crude oil price underpinned CAD bulls in the broad market. However, American market hours saw the pair take a sharp upside move as USD gained strength in the broad market following upbeat US Wall Street equity performance which also boosted US government bond yields. Further, headlines that hinted that U.S. tariff on Chinese goods had been delayed added to positive sentiment and risk appetite in the broad market supporting USD’s spike to weekly highs. However, Optimism surrounding Sino-U.S. trade talks also resulted in Crude oil price gaining momentum in the broad market which underpinned CAD bulls resulting in pair stagnating near 1.33 handle.

Positive Crude Oil Price Limits USD’s Gains

The weekend saw US President Donald Trump express his dissatisfaction over the strength of USD in global market stating that while he wanted strong USD he didn’t want it to be strong in a way that impedes doing business with other nation and blamed the Fed’s rate hike decisions. This caused USD to decline during Pacific-Asian market hours earlier today when trading activities began for the week. This combined with positive crude oil price in market underpinned by optimism surrounding Sino-U.S. trade talks which underpinned risk appetite in the market resulting in the pair seeing rangebound price action for the majority of Asian and European market hours. As of writing this article, the USDCAD pair is trading at 1.33147 up by 0.28% on the day.

The Wall Street Journal published a report during the weekend that mentioned talks between China & U.S. are proceeding in a favorable direction and they are likely to sign a trade deal by end of the month. This caused a fresh wave of risk on trading activity in global equity and forex markets. There are no major macro data updates on either side leaving price momentum to broad market sentiment surrounding both currencies. Till European market hours, both sides have equal strength as risk on trading sentiment and positive crude oil price underpins CAD bulls while USD bulls receive strength from the spike in US T-Yields. Moving forward, the pair could see a breakout in favor of USD if there is a further spike in US T.Yields or if there is a headline that favors the Greenback during American market hours today.  Expected support and resistance for the pair are at 1.3300, 1.3255/50 and 1.3340/50, 1.3400 handle respectively.