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USD/CAD Daily Price Forecast – USD/CAD Range Bound as USD Failed To Breach Resistance at 1.3050 Handle

By:
Colin First
Updated: Sep 17, 2018, 14:51 UTC

Bullish oil prices underpin Loonie and keep a lid on any further up-move, while a subdued USD price action does little to provide any meaningful impetus.

USD/CAD Daily Price Forecast –  USD/CAD Range Bound as USD Failed To Breach Resistance at 1.3050 Handle

The USD/CAD pair broke to the upside last Friday after moving in a consolidation range and trimmed weekly losses from lows of around 140 pips from early September. The move to the upside was boosted by a stronger US dollar. The greenback gained momentum after the release of US data (retail sales and consumer confidence) and amid higher US bond yields. Also the Loonie was pressured by a decline in crude oil prices and not so positive expectations about NAFTA negotiation. Canadian Foreign Affair Minister Chrystia Freeland will not return to Washington for resuming NAFTA talk in the short-term, signaling a deal is not very close. Thus last week ended on positive note for US Greenback.

Pair to Continue Range Bound Price Action as Both Sides Lack Decisive Trigger To Make a Breakout

US Greenback gained additional support for continued positive momentum in near future on news of US President Trump’s Plans to push through with imposing tariffs on Chinese goods despite trade talk attempts to which China replied that implementation of tariff would result in China cancelling trade talks and retaliating with tariffs. While USD continued to grow strong in broad market, the pair failed to breach strong resistance surrounding 1.3050 handle effectively putting an end to continued growth for US Greenback in near future. While the pair has managed to remain stable above 1.3000 handle as pair failed to take advantage of high impact news updates, the pair is expected to move in range bound price action in near future. As of writing this article, the pair is trading at 1.3024 down 0.07% on the day. Investors are now on cautious stance as they await the announcement of the said tariffs which could come anytime today.

The USD bulls held on the defensive, while the prevailing bullish sentiment around crude oil prices underpinned the commodity-linked Loonie and kept a lid on any meaningful up-move for the major. The downside however remained cushioned as NAFTA proceedings has turned sour in short term limiting CAD’s strength in broad market. Moving ahead, today’s relatively thin economic docket, featuring the release of Canadian Foreign Securities Purchases figures and Empire State Manufacturing Index from the US might help traders grab some short-term opportunities. On a sustained move beyond mid-1.3000s, the pair seems all set to aim towards reclaiming the 1.3100 handle before darting towards the 1.3160 supply zone. On the flip side, the key 1.30 psychological mark now seems to protect the immediate downside, which if broken might turn the pair vulnerable to slide back towards testing monthly lows, around the 1.2975 region.

About the Author

Colin specializes in developing trading strategies and analyze financial instruments both technically and fundamentally. Colin holds a Bachelor of Engineering From Milwaukee University.

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