The USDCAD continued its consolidation and ranging for the last 24 hours. With the lack of any news or events that are likely to push the dollar or the CAD in any direction, it is only natural for the pair to consolidate and get itself ready for the next move. The trend for the short and medium term is pretty much clear for now and though there are likely to be bounces in the prices along the way, there does not seem to be much hope left for the bulls.
USDCAD Likely to Weaken Further
Also, the rising oil prices are supporting the CAD even more and all in all, it does look as though the CAD is likely to make a huge run in the days to come. The Fed and the US seem to be close to the end of their rate hike rally while the CAD and the BOC are just getting into the game and so, the effect of that and the unwinding of the dollar longs as a result of that is clear for everyone to see.
We are likely to continue to weaken and move towards the 1.25 region in this pair in the short term and from there, we expect the prices to bounce a bit. This would not mean that there would be a change in the trend but the bounce is likely to be short lived. We expect it to be a kind of relief rally for the dollar longs to get out at some good prices and for the CAD longs to reestablish their positions at higher prices.
Looking ahead to the rest of the day, we do not have any major news from the US or Canada but we expect the report of the failure of the Trump team to push through the healthcare reform bill to weigh on the dollar in the short term and hence we are likely to see some weak consolidation happening.