USD/CAD Daily Fundamental Forecast – July 27, 2017

The USDCAD pair pushed lower on the back of a weak dollar but so far, the the push has not been able to move the pair below the 1.24 region. The progress in the downtrend has clearly slowed down and it remains to be seen whether this lull would lead to a bounce or is just some rest taken by the bears before they start pushing lower with full force once again. This week is pretty dry in terms of economic events and this could also be one of the reasons for the lull in the activity in this pair.

USDCAD Slows Down

Yesterday, the release of the FOMC meeting minutes was followed by another round of selling in the dollar. The dollar bulls were expecting a lot from the minutes and they hoped to see hints of a timeline for the next rate hike. Though the minutes did touch upon the monetary policy and also the balance sheet, there was nothing concrete to support the dollar and the market took this as a signal for further selling of the dollar. The Fed does not seem to be in any mood to interfere with the markets and seems quite happy to let the dollar weaken over the last few weeks and this continued yesterday. This helped to push the USDCAD pair from close to 1.25 to close to 1.24 just after the release of the minutes.

The pair has since recovered from that region and trades below 1.2450 as of this writing. We have been mentioning in our forecasts over the past couple of days on how this region is likely to witness a lot of buying support and that is what we saw yesterday. We expect this support to stop the fall of this pair in the short term and this is likely to be the case for today as well.

Looking ahead to the rest of the day, we do not have any major news from Canada but we have the consumer confidence data from the US. This will have little impact on the dollar and we expect the USDCAD to trade weakly for today though with strong support just beneath.