USD/CAD Daily Price Forecast – USD/CAD Range Bound On USD Sell Off But Stable Above 1.30 Handle

The USD/CAD pair moved during yesterday’s US session between 1.3040 and 1.3000, modestly lower for the day and held all day above last week lows and on top of 1.3000. After a modest rebound on Friday, the USD/CAD pair turned downside again yesterday and this move was triggered due to a slide of the greenback across the board. Economic data from the US had no impact and price action moved was limited on Monday. The pair continued its downward price action across today’s Asian and European market hours but held steady above 1.3000 handle as a recovery in the risk sentiment following the US tariffs announcement boosted the higher-yielding currencies such as the CAD at the expense of safe-haven US dollar. As of writing this article, the USD/CAD pair traded at 1.3023 down by 0.15% on the day.

Downside Limited As Market Had Already Priced In US Tariff Announcement

The spot faded its recovery near 1.3065 region and dropped back to test Monday’s low at 1.3003 levels, as the Loonie regained poise, tracking the bounce in its peers, the Aussie and the Kiwi. However, the CAD remained the weakest among all the commodities-currencies, as the negative sentiment around the US oil kept a check on the upside. The major also came under renewed selling pressure after the US dollar remains broadly undermined, as markets had already priced-in the US tariffs announcement on the Chinese imports. The US imposed 10% tariffs on an additional $ 200 billion worth of Chinese imports. Meanwhile, the conciliatory comments from the Chinese Commerce Ministry on the US-China trade talks “There is no winner in a trade war, cooperation is the only correct choice” helped the risk currency CAD stage a tepid recovery against its American rival.

Macro calendar today will see Manufacturing Shipments in Canada for July and in the US the capital flows numbers; later will be the turn for API crude oil inventories. The main attention is likely to continue on trade talks between the US and Canada and also on definitions about tariffs in the US to Chinese goods. Technical indicators point to the downside ahead of the Asian session but the USD/CAD pair has a strong support at 1.2975/80. A break lower could clear the way to a slide to 1.2935, but intermediate support might be seen at 1.2960. On the upside, immediate resistance might be seen at 1.3025/30, followed by 1.3055 and 1.3075/80.