USD/CAD Daily Price Forecast – USD/CAD Likely To Continue Bullish Price Action Supported By Fed Rate Hike

The USD/CAD pair held within striking distance of over 18-month tops, albeit seemed struggling to build on the momentum further beyond the key 1.3500 psychological mark. Against the backdrop of Wednesday’s softer than expected Canadian inflation figures, a sudden fall in crude oil prices weighed heavily on the commodity-linked Loonie and helped the pair to find decent support ahead of the 1.3400 handle. The up-move got an additional boost, lifting the pair to its highest level since early-June 2017, amid a goodish US Dollar rebound after not so dovish FOMC monetary policy statement/economic projections, foreseeing two rate hikes in 2019.

Ongoing bearish fall in oil prices weighs on Loonie

The greenback failed to capitalize on the overnight rebound and remained on the defensive, which was eventually seen exerting some downward pressure on the major, though the downside might still be limited amid the ongoing bearish fall in crude oil prices. As of writing this article, the USDCAD pair is trading at 1.3463 down by 0.16% on the day. Hence, it would be prudent to wait for a strong follow-through long-unwinding/meaningful retracement before confirming that the pair might have already printed a near-term top around the 1.3500 handle. On release front today, US markets will see release of Philadelphia Fed’s Manufacturing Index and employment data while Canadian markets will see release of wholesale Sales data which are expected to keep volatility high during today’s market hours.

When looking from technical perspective, the pair could continue to gain altitude in the near future on the back of a bullish technical setup and hawkish Fed hike. Pennant breakout and the ascending 50, 100, and 200 moving averages (MAs) indicate the bulls are in control however, the RSI is closing on overbought levels. As a result, the bullish momentum may wane before further upside unfolds. Notably, the Fed left the markets behind the curve by forecasting two rate hikes in 2019. The American dollar, therefore, is likely to remain bid, while heading into the year’s end. So, the USD/CAD pair could soon find acceptance above 1.35 and rise toward the Dec. 2016 high of 1.3598. On the flipside, the bullish pressure would weaken if the pair closes below the ascending 10-day MA, currently at 1.3404.