USD/CAD Daily Price Forecast – USD/CAD Back Above 1.32 Handle despite Decline over Profit Booking Activity

The pair has broken out higher over the last 24 hours and continues to piggy back on the dollar strength
Colin First
USDCAD Thursday

The USD/CAD pair caught some fresh bids on Thursday, with bulls now eyeing a move back above the 1.3200 handle. A combination of supporting factors helped the pair to stall overnight sharp retracment slide from 2-1/2 week tops and find decent buying interest near the 1.3160 region. The US Dollar remained supported by upbeat economy outlooks from the Fed Chair Jerome Powell and the central bank’s Beige Book report, which reinforced gradual Fed rate hike prospects. This coupled with a negative trading sentiment around crude oil prices weighed on the commodity-linked currency – Loonie and provided an additional boost. The pair has now recovered all of its previous session’s losses and a follow-through up-move, led by some fresh buying/short-covering, now looks a distinct possibility.

USDCAD Recovers

Today’s economic docket, featuring the release of Canadian ADP National Employment Report, along with Philly Fed Manufacturing Index and the usual initial weekly jobless claims data from the US, will now be looked upon for some fresh impetus. The loonie has strengthened in advance of an interest rate hike in Canada. However, there is no particular stimulus at this point in time for further loonie strength. Short term outlooks remains in favor of US Greenback due to multiple reasons such as Canadian exports not seeing much of a boost even with loonie depreciation, high energy prices which have led to rising inflation and hike in interest rate which resulted in Canadian GDP growth taking a hit. Meanwhile the U.S. dollar has remained relatively unscathed by the growing tensions pertaining to the U.S. – China trade war.

USDCAD Hourly

This is very clear when we see that in the past couple of weeks, the dollar has actually been rising against the euro. Taking this into consideration, the Canadian dollar has been showing a certain degree of strength in the past two weeks given greenback strength. With markets anticipating an interest rate rise in Canada for some weeks and the Bank of Canada having delivered on that promise the CAD benefited from positive speculation with medium term outlook remaining relatively neutral. Immediate resistance is pegged near the 1.3215 level, above which the pair is likely to head back towards retesting overnight swing high level of 1.3260 before eventually darting to reclaim the 1.3300 mark. On the flip side, the 1.3165-60 area now seems to have emerged as an immediate support, which if broken might turn the pair vulnerable to slide back towards 1.3130 support en-route the 1.3100 handle.

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