USDCAD on Bullish Breakout As Predicted

The USD/CAD pair built on overnight strong gains and jumped to the top end of its two-week-old trading range, comfortably above the 1.2900 handle. A modest retracement in crude oil prices weighed on the commodity-linked currency – Loonie and continued driving the pair higher through the Asian session. Further gains, however, are likely to remain capped amid a subdued US Dollar price action. The pair made a breakout above previous resistance at 1.294 post Fed Chair Powell’s speech in Zurich gaining upward thrust.

USDCAD Rises Higher

Fed Chair Jerome Powell during his speech said that the Fed’s actions should not surprise markets and provided a minor boost to the US Dollar. When speaking at the Conference Powell was also noted saying that markets are reasonably well aligned with ‘dot-plot’ but some investors, institutions may not be well positioned for Fed hikes. While investors predicted huge volatility during yesterday’s trading session from Jerome Powell and US President Trump’s speech, the bullish momentum gained from Powell’s speech was capped post mixed statements issued by European countries after Presidents Televised address in which he announced US is pulling out of Nuclear deal with Tehran.

Many European allies involved in the agreement with Iran such as U.K, Germany and France said that they had regret and concern over President Trump’s decision to pull out of the agreement and that they plan to continue abiding by the agreement. However another European Country Israel’s Prime Minister Benjamin Netanyahu said he “fully supports” Trump’s decision and thanked the president for his courageous leadership. Former US President Barack Obama said that “Without the JCPOA, the United States could eventually be left with a losing choice between a nuclear-armed Iran or another war in the Middle East.”

Canada’s economic calendar remains light till Friday and there are no immediate signs of Canadian dollar making bullish headway anytime soon. In US Calendar investors are on lookout for Core PPI and Crude Oil Inventory data to be released later today. US dollar is expected to remain capped below 1.30 during today’s trading session however it is expected to maintain its movement well above yesterdays gain in a range of 1.2936 to 1.297. A better than expected PPI data can help USD breach 1.30 handle but the price would come back to fundamental range of 1.297 to 1.299. Expected support and resistance for the pair are at 1.294 / 1.292 and 1.300 / 1.302 respectively.