USD/CAD Daily Price Forecast – USD/CAD on Steady Decline over Crude Oil Price Action

USDCAD lost ground on Tuesday as Crude Oil price gained momentum post Saudi Arabia’s production cuts which boosted commodity linked currency Loonie in global market.
Colin First

The USD/CAD pair extended overnight retracement slide from near three-week tops and weakened farther below the 1.3100 handle through the early European session. As of writing this article the pair is trading at $1.3094 down by 0.30% on the day. A decent recovery in the Turkish Lira, up by more than 5% for the day, helped ease some concerns about the contagion effect and drove flows away from perceived safe-haven currencies, including the US Dollar. Even a strong follow-through uptick in the US Treasury bond yields failed to revive the greenback demand, with traders opting to light their bullish USD bets amid improving global risk appetite. Meanwhile, the ongoing positive momentum around crude oil prices, supported by a report from OPEC, confirming that Saudi Arabia had cut production to avert looming oversupply, underpinned the commodity-linked Loonie and further collaborated to the pair’s heavily offered tone on Tuesday.

Investors Await July’s Import & Export Price Index Data Before Placing New Bets

As market jitters eased it reduced the appeal of the US Dollar, which enjoyed a bullish run in response to the recent slump of the Turkish Lira. While trade relations between the US and Canada showed fresh signs of deterioration, with the Trump administration continuing to threaten the imposition of tariffs, this failed to offer the USD/CAD exchange rate much in the way of support. July’s US consumer inflation expectations reading did little to improve the appeal of the US Dollar on Monday afternoon, with the measure holding steady on the month. With forecasts pointing towards a fresh dip in the latest NFIB small business optimism index the US Dollar could weaken further during today’s trading session. Signs of softening domestic confidence could raise fresh concerns over the ultimate impact of the Trump administration’s belligerent approach to international trade, with the impact of trade tariffs starting to filter through into the wider economy. However, a solid showing from July’s import and export price index results may offer the USD/CAD exchange rate a fresh rallying point. Markets continue to expect the Federal Reserve to deliver further monetary policy tightening before the end of the year, limiting the vulnerability of USD exchange rates.

With today’s downfall, the pair has now retreated nearly 100-pips from overnight swing high level of 1.3171 and has also weakened back below 50-day SMA. Hence, a follow-through weakness, led by some fresh long-unwinding amid absent market moving economic releases, now looks a distinct possibility. Any subsequent weakness is likely to find support near the 1.3055-50 horizontal zone, below which the pair is likely to challenge the key 1.3000 psychological mark before eventually dropping to test 100-day SMA support, currently near the 1.2970 region. On the flip side, momentum back above the 1.3100 handle is likely to confront immediate resistance at 50-day SMA, near the 1.3125 region, which if cleared could lift the pair back towards 1.3170-80 intermediate hurdle en-route the 1.3200 round figure mark.

Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.