USD/CAD Daily Price Forecast – USD/CAD Moves Downtrend On Retreating Dollar Ahead of US FOMC Update

The USD/CAD pair held on to its mildly weaker tone through the early European session, with bears eyeing a follow-through weakness below the 1.3400 handle. The pair struggled to build on the overnight up-move and started retreating from one-week tops amid some renewed US Dollar selling bias. After a brief pause during the Asian session, the greenback resumed with its recent corrective slide from 1-1/2 year tops and continues to be weighed down by uncertainty over Fed’s rate hike path in 2019. The prospect for pause in rate hike plans for 2019 increases with each passing day as dovish macro data outcome over the last week in US market hinted at slowdown in economic growth in U.S.A while other major markets across the globe such as China & Europe also saw slowdown in economic growth.

Bearish Crude Oil Price Helps Limit US Greenback’s Decline

As of writing this article, USD/CAD pair is trading flat at 1.3400 down by 0.05% on the day. However the downside move of US dollar remained cushioned at least for the time being amid the prevailing bearish sentiment surrounding oil markets, which dampened demand for the commodity-linked currency – Loonie. Price of spot US crude oil WTI/USD continued to decline across today’s trading session and is currently at $48.23 per barrel down by 1.93% on the day as reports of growing inventory and concerns over future demand amid global economic slowdown greatly decreased demand in crude oil market. It would now be interesting to see if the pair is able to find any buying interest at lower levels or continues with its corrective slide as the market focus remains glued to the upcoming FOMC monetary policy decision, scheduled to be announced during the US trading session on Wednesday.

The Canadian calendar will see release of manufacturing sales data while US calendar will see release of building permits and housing starts data scheduled to release in American market hours which will provide short term opportunity for investors ahead of US FOMC rate decision update. When looking from technical perspective, immediate support is pegged near the 1.3380 horizontal level, below which the pair is likely to accelerate the slide towards mid-1.3300s before eventually dropping further towards the 1.3320-10 support area. On the flip side, the 1.3420 region now seems to have emerged as an immediate hurdle and is followed by multi-month tops, around the 1.3445 level, which if cleared might assist the pair to aim towards reclaiming the key 1.3500 psychological mark.