USD/CAD Daily Fundamental Forecast – July 28, 2017

We have been warning of an impending bounce in the USDCAD pair from this region over the last few days and the bounce did indeed arrive. This bounce came on the back of the recovery in the dollar strength over the last 24 hours which was felt all across the markets. The recovery came about due to the improvement in the economic data from the US. The consumer confidence data came in stronger than expected and the advance trade balance also came in stronger which means that the GDP could come in better.

USDCAD Finally Gets a Decent Bounce

This led to a bout of strength in the dollar which helped the USDCAD pair to recover. With the bears already sitting on a lot of profit, all that was needed was a hint of trouble and they have immediately started exiting their positions which has in turn led to a much quicker recovery in the prices of this pair. The pair shot up from the low 1.2400s to beyond 1.2500 and it trades just below the 1.2550 mark as of this writing and continues to look strong.

We had mentioned that the region between 1.24 and 1.25 is likely to see a lot of buying support and that this was probably the best region for the bounce to happen and now we see that the bounce has happened and the pair is safely above 1.25 at this point of time.

Looking ahead to the rest of the day, we have the advance GDP data from the US which is likely to determine the short term direction for this pair. We also have the GDP data from Canada at the same time and a combination of these 2 data events is likely to bring in a lot of volatility in the USDCAD pair. The bounce still has some legs left but eventually, the trend is down and hence the bounce is likely to be sold into.