USD/CAD Daily Price Forecast – Weak Crude Oil Price To Help US Dollar Retain Upper Hand

Dovish crude oil prices undermines Loonie but subdued momentum in US Greenback resulted in range bound price action.
Colin First
USD/CAD Daily Forecast
USD/CAD Daily Forecast

The USDCAD pair last week closed on a positive note with the majority of price action in favor of US Dollar. While CAD gained ground on Crude oil price hitting new 2019 high, the decline that followed shortly resulted in USD retaining the upper hand. The pair opened on a neutral note and saw range-bound price action for the majority of the day. However, the price action managed to hold steady above 1.34 handle across the day as US T.Yield saw recovery action today. The US Greenback suffered sharp losses in the market owing to US T.Yield curve inversion which triggered risk-averse price action since last Friday’s American market hours.

A Dovish Wall Street Activity Could Limit USD’s Gains

Crude oil’s dovish price action got a boost following Friday’s US T.Yield’s curve inversion. An inversion in US T. Yield is viewed as a sign of recession in the US economy. Further, increasing concerns of an economic slowdown in the Asian and European economy which was reiterated by key figures from major central bank added to risk-averse trading activity. Concerns of an economic slowdown is interpreted as a signal for less demand for crude oil consumption in the near future. This resulted in Crude oil price declining in both spot and futures markets despite support stemming from OPEC enforced production and supply cut measures continuing to underpin Crude oil bulls.

Canadian Loonie being a commodity-linked currency suffers when crude oil price weakens in the global market. There are no high impact macro data updates in the Canadian calendar across this week. While weak USD is providing some level of positive support to US Greenback bulls, safe-haven demand for USD amid risk-averse trading activity is also likely to add support to USD bulls. However, concerns of recession in US is likely to weigh down Wall Street equities and this is likely to pressure US Greenback preventing sharp gains. This suggests that the pair will see rangebound price action across US market hours with bias in favor of US dollar. But, neither side is likely to make much headway as both sides of the currency pair have equally pull from bulls and bears.

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