USD/CAD Daily Price Forecast – USD/CAD Near 2-Month High’s On Dollar’s Gain Post FOMC UpdateGreenback gains traction following FOMC rate statement while Crude oil weakness continues to hurt the loonie.
The USD/CAD pair gained more than 70 pips during north American market hours as the greenback gathered strength after the Fed decided to keep the policy rate unchanged and didn’t mention any risks related to recent market volatility in its policy statement. While FOMC mentioned in its statement that information received since the Federal Open Market Committee met in September indicated that the labor market has continued to strengthen and that economic activity has been rising at a strong rate, many analysts and investors believe that lack of any information regarding the downside risks related to Trump administration trade policy or the flattening yield curve to be a warning sign for economic slowdown.
Crude Oil Over Supply Concerns Affect Loonie’s Price Action in Broad Market
However investors also see the statement to be hawkish forward guidance as there wasn’t any major changes compared to last month’s statement and investors now expect a rate hike in December followed by four more rate hikes in 2019 which has greatly boosted demand for USD in broad market owing to positive long term outlook. On the other hand, the ongoing crude oil sell-off continues to hurt the demand for the commodity-sensitive loonie owing to oversupply concerns as oil production in the U.S. hit record levels and Iran sanctions failed to impact the global supply as expected, price per barrel of WTI continues to fall. The pair has rallied to a fresh 2-month high and is currently trading at 1.3196 up by 0.31% on the day.
When looking at the pair from technical perspective, Long term outlook as per current data, favors bullish price action in USDCAD pair as it trades above ascending trend line, which has been holding since September 2014. According to the RSI, the market could maintain positive momentum in the short-term as the indicator is positively sloped above its neutral threshold of 50, while the MACD oscillator is ready to post a bullish crossover with its trigger line in the daily chart. Moving forward the pair could face resistance around 1.3230 handle followed by 1.3290 mark. On the flip side, 1.3072 continues to act as immediate support, a drop below this price level could see retest of 1.3020 handle.