USD/CAD Daily Fundamental Forecast – February 28, 2017

USDCAD had a strongly bullish day yesterday as the bulls sought to take control over this pair once again, this week. Last week, they had tried to seize control due to a failure in the retail sales data from Canada but their advance was beaten back when the CPI data from Canada came in higher. They have made another attempt to break through yesterday and so far, this attempt has failed at the range highs from last week.

USDCAD Still In Uptrend

The repeated and strong defence of the support region around 1.3000 and 1.3060 has reinforced our belief that the uptrend is intact and these bounces off the support region, due to various factors, has also helped us to continue to believe in the uptrend. This also shows how key, the region around 1.3060 is going to be, in the battle between the bulls and bears and so far, the bulls have been clearly winning the battle as the bears have been unable to break through.

For a long time yesterday, the USDCAD pair was loitering around the 1.3100 mark but it received a boost very late in the night as the strength of the dollar increased, based on the statement from Trump where he made clear his intentions to increase infrastructure spending. This helped to push the pair higher and it was further increased as the oil prices dropped off a little.

The oil prices have always been key as far as the CAD is concerned and the lack of advance in the oil prices could spell trouble for the CAD in the short and medium term as the Canadian economy depends a lot on oil. A combination of dollar strength and oil prices weakness could severely affect the bears in this pair as it is likely to push the USDCAD to new highs.

Looking ahead to today, we do not have any major news from Canada but we have the Prelim GDP and consumer confidence data from the US which should keep the pair volatile. We expect the pair to consolidate between 1.31 and 1.32 for the rest of the day with a bullish bias.