USD/CAD Daily Fundamental Forecast – June 26, 2017

USDCAD continued to trade in the next leg of its downtrend and with good liquidity and volatility, we should see the pair breaking through 1.3200 and challenging 1.31 in the short term. This is something that we have been mentioning over the last few forecasts when we had said that the region between 1.3300 and 1.3330 is likely to serve as a strong resistance to the bounce that we saw in the middle of last week.

USDCAD Likely To Weaken Further

This came out to be true as the pair could not push through all the selling in that region and capitulated back towards 1.32 on the back of a strong retail sales report from Canada. The only thing that could save the pair in the short and medium term are the weak oil prices. In fact, the weak oil prices are the reason why the pair has managed to stay afloat so far as this has helped to weaken the CAD somewhat and thus preventing a total rout.

The oil prices are expected to get weaker in the short term and this could help the pair consolidate and range. But in the medium term, it has to be kept in mind that the conflict in the Middle East could escalate and there are some parties, like Saudi Arabia, that would like to see strong oil prices. So, if they do anything to push the oil prices higher, this could support the CAD and this, along with hopes of a rate hike from Canada, could mean a total rout as far as the USDCAD pair is concerned.

Looking ahead to the rest of the day, we do not have much news from Canada or USA and so we can safely expect some consolidation and ranging for the rest of the day. Volatility and liquidity are likely to be low today but pick up later in the week as there are a host of Central bank leaders scheduled to make speeches during the course of the week.