USD/CAD Daily Price Forecast – USD/CAD Continues To Maintain Consolidative Price Action Ahead of US Crude Oil Inventory Data

The USD/CAD pair traded with a mild negative bias on Wednesday and eroded a minor part of the previous session’s strong upsurge to 4-1/2 month tops. A combination of factors helped the pair to build on previous session’s modest uptick and prompted some aggressive short-covering rally during the US trading session on Tuesday. Adding to this, the overnight slump in crude oil prices further undermined demand for the commodity-linked currency – Loonie and further collaborated towards accelerating the upward momentum. The pair surged through the 1.3300 handle for the first time since late-June, albeit a goodish rebound in oil prices kept a lid on any strong follow-through up-move on Wednesday. As of writing this article, the USDCAD pair is trading at 1.3287 down by 0.14% on the day.

Bearish Macro Data on Both Sides of Pair Resulted in Pair Continuing Consolidative Price Action

The greenback was also seen consolidating overnight strength and failed to provide any fresh bullish impetus, leading a mildly softer tone through the early European session. A rebound today with WTI rising up by 1.8% to $54.40 per barrel helped provide some relief for the loonie following yesterday’s pressure. For now, despite the rebound in oil, the loonie is failing to put up any modest gains against the dollar as investors continue to maintain cautious investor stance over proceedings of geo-political issues. The key to trading the pair will be to watch out for how US equities perform later in the day as I reckon that will be the key driver of risk sentiment in markets today. For now the pair is range bound in consolidation zone but upside move looks highly likely owing to broad based momentum and demand surrounding USD.

On release front, the Canadian calendar lacks first tier data, while the wholesale data which was released earlier today came out worse than expected which also limited chances for Canadian Loonie seeing any gains during today’s market hours. US markets saw a worse than expected core durable goods order data and now investors await existing home sales data and Crude oil inventories data. A dovish outcome in those readings could help Loonie make some headway as dovish crude oil inventory data will push oil prices higher. When looking from technical perspective, any subsequent retracement slide now seems to find some support near the 1.3260-50 region, below which some follow-through long-unwinding trade could accelerate the fall back towards the 1.3200 round figure mark. On the flip side, the 1.3300 handle now becomes an immediate strong hurdle, which if cleared is likely to lift the pair further towards the 1.3340 intermediate support zone en-route YTD tops, around the 1.3380-85 region.