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USD/CAD Daily Fundamental Forecast – May 26, 2017

By:
Colin First
Published: May 26, 2017, 05:13 UTC

We had mentioned in our forecast yesterday that the next direction in the USDCAD pair would be dependent on the oil prices and the OPEC meeting that was

USD/CAD Daily Fundamental Forecast – May 26, 2017

We had mentioned in our forecast yesterday that the next direction in the USDCAD pair would be dependent on the oil prices and the OPEC meeting that was held yesterday and as expected, the pair shot up during the course of the day yesterday as the OPEC meeting concluded on a disappointing note, as far as the markets were concerned.

USDCAD Rockets Higher as Oil Falls

The markets were expecting the OPEC members to extend the production cut deal for a much longer time and were also expecting the production cut to be much deeper than what it is now. But what the market got was another 9 month extension in the production cut deal with Libya and Iran allowed to maintain status quo. This was a large disappointment to the oil market which then sold off pushing the oil prices lower. This was a blow to the CAD as well as the Canadian economy depends a lot on the oil prices.

USDCAD Hourly
USDCAD Hourly

So, from the support region of 1.34, we have seen the USDCAD pair bounce by over 80 pips as of this writing as the CAD weakens across the board. This pair was further boosted by the steady strength of the dollar as well and now we are back to the strong support turned resistance in the 1.35 region. The weekly close will be watched with great interest as any close above 1.35 would mean that the bulls are back in control and then we can start looking higher again. But if the weekly close is below the 1.35 region, then we can say that the bears have regained control and can see some more selling in the pair in the short term.

Looking ahead to the rest of the day, we have the Prelim GDP and Durable Goods data from the US but traders would be advised to stay on the sidelines and wait and watch the weekly close to determine the trend for the short term.

About the Author

Colin specializes in developing trading strategies and analyze financial instruments both technically and fundamentally. Colin holds a Bachelor of Engineering From Milwaukee University.

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