USD/CAD Daily Fundamental Forecast – May 22, 2017

USDCAD continues to trade weakly to begin the week and this is likely to be the theme in the markets for today and for the short term as well. The pair has been under pressure as the CAD has been boosted by the rising oil prices. We also see that the dollar is on the backfoot all across the markets and this is enough to the pair to come under pressure and move towards the 1.35 mark where it is trading at this point of time.

USDCAD Under Pressure

This is likely to be a very crucial region where a battle between the bulls and bears is likely to get going. A clean break through this region is likely to push this pair into a downtrend with a short/medium term target of 1.35 and this is what the bulls would like to guard against. They are going to find this a very difficult job to do as they are up against a weakening dollar and rising oil prices.

The oil prices are set to continue rising in the short term as it is generally expected that the OPEC countries and other oil producers would announce an extension of the deal till next year and might also announce a much larger production cut, going forward. This is what the market is currently pricing in and this has helped to support the CAD over the past week or so and would continue to do so in the short term.

Looking ahead to the rest of the day, we do not have any major economic news from the US or Canada and so we can expect some consolidation and a long battle in this region. We could also see some bounce in the USDCAD pair as the bulls would try to make a stand but that is likely to be short lived.