USDCAD on Path Towards Possible Bullish Breakout

The Canadian dollar posted slight gains on Monday session, after trading sideways on Friday. USD/CAD was trading at 1.2878 up 0.24% yesterday and USD continues to gain on CAD as trading session progresses further into the week. There was no major releases in the US or Canada yesterday which resulted in USD capitalizing on its momentum erasing losses from previous week.

USDCAD Looking Higher

Despite performing strongly against major trading partners, the US Dollar has struggled to make any inroads against one of its close trading partners, the Canadian Dollar. Trapped in an extraordinarily tight range, USD/CAD is clearly being eyed for a big move. The Loonie failed to gain momentum from Friday’s positive IVEY PMI updater. The US economy has remained strong with little signs of economic weakness. One such instance when US showed such a sign of weakness was on Friday when the macroeconomic data was of mixed outcome.

But US Dollar managed to erase all losses from Friday and has moved back into its bull run as trading session began for the week while CAD remains relatively neutral due to lack of strong trigger to break US dollar’s momentum. So far the pair continues to remain in tight range due to NAFTA negotiations and rise in Oil price but the loonie hasn’t gained much ground against its major counterpart. This leads traders to consider possibility for further weakness in loonie.

Bank of Canada Governor Stephen Poloz said in a event last week that The Canadian economy is in good shape and the markets can expect additional rate hikes this year, however he pointed out that NAFTA negotiations and household debt remain major concern as they can possibly cause negative impact on economy. Comments from BOC Dep. Gov. Lane during yesterday’s speech was constructive, highlighting a ‘better track’ for global growth however he also raised concerns over trade policy.

Investors are on look out for Fed Chair Powell speech in Zurich and US President Donald Trump’s speech later today before making any major bets. The pair is currently trading at 1.2903  price range and price continues to grow in US dollar’s favor. If the price breaches resistance at 1.294 during today’s trading session, the pair is expected to see huge bullish headway with next level of resistance around 1.302 to 1.304 price range. The Canadian macro economic calendar remains  light across the week with only signs of high impact news on Friday. Expected support and resistance price level 1.283 / 1.279 & 1.294 / 1.298 respectively.