USD/CAD Price Analysis – Sep 29, 2023
Daily Price Outlook
During this European session on Friday, the USD/CAD currency pair experienced a resurgence in buying interest, successfully putting an end to its two-day losing streak. However, this uptick in momentum was due to the weakening of Crude Oil prices, which undermined the canadian dollar and acted as a supportive factor for the USD/CAD pair. Simultaneously, the US Dollar received a boost from the Federal Reserve's hawkish stance, further contributing to the pair's upward movement. Looking ahead, traders approached the market cautiously, refraining from taking strong positions, as they awaited crucial economic data releases, including the US Core PCE Price Index and Canadian GDP figures.
Crude Oil Price Drop and Its Impact on USD/CAD Pair
It is worth noting that the crude oil price dropped below the one-year high it had reached the previous day. This decline in oil prices is having an impact on the Canadian dollar, which tends to move in sync with oil, and it's giving a boost to the USD/CAD pair. However, the reason behind this fall in oil prices is the anticipation that Russia and Saudi Arabia may increase their oil production. This expectation is overshadowing the positive outlook for increased oil demand from China during its Golden Week holiday. As a result, traders are becoming less confident about the prospects of oil prices rising, particularly following this week's nearly 8% surge from the mid-$88.00s.
US Dollar Strength Supports USD/CAD Pair
Another factor boosting the USD/CAD pair is the overall strength of the US Dollar (USD). Investors are overlooking somewhat lackluster US economic data from Thursday and are instead focusing on the Federal Reserve's efforts to prevent the USD from declining. Just last week, the central bank warned that persistent inflation in the US might lead to at least one more interest rate hike before the year's end.
Looking forward, all eyes are on the release of the US Core PCE Price Index, which is the Fed's preferred measure of inflation. This data will influence market expectations regarding the Fed's next moves, impacting USD demand and providing fresh momentum to the USD/CAD pair. Traders on Friday will also be watching the monthly Canadian GDP figures and the dynamics of oil prices for short-term trading opportunities.
USD/CAD - Technical Analysis
The USD/CAD currency pair has initiated a downward trajectory, exerting pressure on the pivotal support level at 1.3480. In light of this movement, it is prudent to remain neutral until a clearer directional signal emerges, which could be ascertained through either a breach of the aforementioned support or a surpassing of the 1.3520 resistance level.
It's crucial to underscore that if the support is compromised, it could pave the way for the currency pair to revert to a bearish trajectory, targeting subsequent levels at 1.3400 and then potentially 1.3359. Conversely, if the pair manages to overcome the resistance, it could potentially signify the rejuvenation of a bullish trend, with the next significant objective positioned at 1.3585.
For today's trading activities, the anticipated range is demarcated between the support at 1.3410 and the resistance at 1.3560. The prevailing sentiment for the day remains neutral.
USD/CAD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
USD/CAD advanced during intraday trading, subsequently testing the crucial resistance level at 1.3300. Additionally, it approached the resistance of the 50-day SMA and tested the short-term downward secondary trend line. The RSI displayed negative signals after entering the overbought zone.
Based on these factors, we anticipate the pair to retrace lower, with a target towards the initial support at 1.3200, under the condition that the resistance at 1.3300 remains intact.
The projected trading range for today lies between the support level of 1.3200 and the resistance level of 1.3300.
Our price prediction for today suggests a likely bullish trend. Traders are advised to closely monitor the price action and consider this bullish outlook when planning their trading strategies for USD/CAD. However, prudent risk management practices should be implemented due to the dynamic nature of the market.
USD/CAD - Trade Idea
Entry Price – Buy Above 1.32618
Take Profit – 1.33822
Stop Loss – 1.31970
Risk to Reward – 1: 1.86
Profit & Loss Per Standard Lot = +$120/ -$64
USD/CAD Price Analysis – Aug 02, 2023
Daily Price Outlook
The USD/CAD currency pair showed positive momentum for the second consecutive day on Wednesday. In the Asian session, it briefly dipped to around 1.3260 but quickly recovered, moving closer to the three-week high it reached the day before. Despite the upward trend, bullish traders are exercising caution and waiting for sustained strength above the key 1.3300 level before considering further upward moves. However, this cautious approach reflects the market's desire for more confirmation of the pair's strength before committing to higher positions.
Fed's Rate Hike Expectations Support US Dollar Amid Credit Rating Downgrade
Despite a credit rating downgrade of the US government's credit to AA+ from AAA by Fitch, the US Dollar (USD) is still strong. This is because the Federal Reserve (Fed) is expected to raise interest rates by 25 basis points one more time. Fed Chair Jerome Powell said the economy needs to slow down and the job market needs to weaken for inflation to return to the 2% target. However, the stronger US economic data supporting the chance of more rate hikes adds to the positive feeling about the USD.
Global Risk Sentiment Weighs on Equity Markets, Benefits Safe-Haven USD
Moreover, the USD/CAD currency pair is getting further support as global risk sentiment weakens, and investors turn to the US Dollar as a safe-haven asset. However, the surge in Crude Oil prices, hitting the highest level since April 17, supports the commodity-linked Canadian Dollar (CAD) and may hold back aggressive buying of the USD/CAD pair. This could limit aggressive buying of the USD/CAD pair. Although, the decrease in US oil inventories helps balance demand worries and keeps supporting Oil prices, adding to the strength of the Canadian Dollar.
Traders should pay close attention to short-term opportunities and keep an eye on the monthly employment reports (NFP report) from the US and Canada, scheduled for release on Friday. These reports can greatly influence the movement of the USD/CAD pair.
USD/CAD - Technical Analysis
USD/CAD advanced during intraday trading, subsequently testing the crucial resistance level at 1.3300. Additionally, it approached the resistance of the 50-day SMA and tested the short-term downward secondary trend line. The RSI displayed negative signals after entering the overbought zone.
Based on these factors, we anticipate the pair to retrace lower, with a target towards the initial support at 1.3200, under the condition that the resistance at 1.3300 remains intact.
The projected trading range for today lies between the support level of 1.3200 and the resistance level of 1.3300.
Our price prediction for today suggests a likely bullish trend. Traders are advised to closely monitor the price action and consider this bullish outlook when planning their trading strategies for USD/CAD. However, prudent risk management practices should be implemented due to the dynamic nature of the market.
USD/CAD Price Analysis and Trade Forecast: Daily Trading Signal
Daily Price Outlook
- The USD/CAD pair is exhibiting a bullish bias around the 1.3635 level during the Asian session.
- Bullish momentum was observed in the Canadian dollar around the 1.3567 level, supported by hammer and spinning top candlestick patterns on the four-hour chart.
- Resistance is anticipated around the 1.3658 level, with potential targets at 1.3698 and 1.3745. Immediate support is expected at 1.3580, while a break below may target 1.3500.
During the Asian session, the USD/CAD pair is trading with a bullish bias around the 1.3635 level. Analyzing the four-hour timeframe, we can observe that the Canadian dollar has experienced a bullish momentum around the 1.3567 level.
The presence of hammer and spinning top candlestick patterns at this level indicates a potential bullish reversal for the USD/CAD pair. Additionally, this level aligns with another trendline visible on the four-hour chart, further strengthening the bullish sentiment.
On the upside, the Canadian dollar may encounter resistance around the 1.3658 level. A successful bullish breakout above this level could lead the Canadian dollar towards the next resistance level at 1.3698, and potentially even higher towards 1.3745.
On the downside, immediate support is expected around the 1.3580 level. If the Canadian dollar breaks below this level, the next target could be around 1.3500.
To summarize, it is important to monitor the 1.3560 level as a potential breakout above it could offer an opportunity to capture a bullish position. Conversely, keeping an eye on the 1.3603 level is also crucial, as a failure to break above it may present a chance to initiate a bearish position.
USD/CAD Price Chart – Source: Tradingview
USD/CAD – Trade Idea
Entry Price – Buy Limit 1.36079
Stop Loss – 1.35600
Take Profit – 1.36975
Risk to Reward – 1 : 1.8
Profit & Loss Per Standard Lot = +$896/ -$479
Profit & Loss Per Micro Lot = +$89/ -$47
USD/CAD Price Analysis – May 31, 2023
Daily Price Outlook
Ahead of Wednesday’s European session, USD/CAD experienced a surge in bids, testing a falling resistance line at 1.3650 that has held for two months. The Loonie pair’s action elucidates the market’s cautionary stance in the face of Canada’s first quarter (Q1) 2023 gross domestic product (GDP) data and major risk factors, notably updates on the resolution of the US debt ceiling and Fed projections.
USD/CAD is finding it hard to rally in the wake of oil prices declining near 1.3600 as the US dollar pulls back ahead of significant triggers. USD/CAD is dipping to 1.3600 in the early Asian session on Wednesday in anticipation of Canada’s crucial growth figures.
This is a reversal from Tuesday’s bounce from 1.3567, pulling back from 1.3613. Apprehension surrounding the US Senate’s vote on the debt ceiling deal may also be a snag for the Loonie pair. However, the quote is influenced by a dip in WTI crude oil prices.
Considerable attention is given to month-end rebalancing and the cautious approach preceding major data or events. Mixed US data might also pose a challenge to the dollar. As such, the US Dollar Index (DXY) reached its highest levels since mid-March on Tuesday before snapping a five-day winning streak and recording the largest daily loss since April 19, closing the North American session around 104.05.
Concerns about the ability of US policymakers to avert the looming default have led WTI crude oil to its lowest levels in four weeks, plunging more than 4.0% to register the biggest daily loss since May 2. Additionally, the US drive to tap into the Strategic Petroleum Reserve (SPR) and expectations of elevated oil production exert downward pressure on oil prices.
The US Conference Board’s (CB) Consumer Confidence Index dipped marginally to 102.30 in May from an upwardly revised 103.70 in April (from 101.30). According to additional details in the survey report, consumer inflation expectations for the coming year edged down from 6.2% in April to 6.1% in May.
Moreover, the US House Price Index rose by 0.6% MoM, outperforming the expected 0.2% and the prior 0.7% (revised from 0.5%), while the S&P/Case-Shiller Home Price Indices dropped to -1.1% YoY in March from 0.4% prior and -1.6% expected.
The Dallas Fed Manufacturing Business Index for May declined from -23.4 to -29.1, falling short of market estimates of -19.6.
USD/CAD Price Chart – Source: Tradingview
USD/CAD – Technical Outlook
During the Asian trading session, the USD/CAD pair displays a positive inclination, hovering around the 1.3635 mark. A glance at the four-hour chart reveals a surge of bullish activity for the Canadian dollar around the 1.3567 mark.
The existence of hammer and spinning top candlestick patterns at this level signifies a possible uptrend for the USD/CAD pair. Furthermore, this point coincides with another trendline observable on the four-hour chart, amplifying the bullish outlook.
In terms of upward movement, the Canadian dollar could face resistance near the 1.3658 mark. A successful rally above this mark could steer the Canadian dollar toward the next resistance level at 1.3698 and potentially even higher towards 1.3745.
On the downward side, immediate support is anticipated around the 1.3580 mark. Should the Canadian dollar dip below this mark, the next aim could be around 1.3500.
In conclusion, keen observation of the 1.3560 level is crucial, as a potential surge above it could provide a chance to take a long position. On the flip side, the vigilance of the 1.3603 level is equally important, as a failure to surge above it may offer an opportunity to enter a short position.
USD/CAD Price Analysis – April 20, 2023
Daily Price Outlook
USD/CAD is up 0.06% in 24 hours, trading at 1.3468. According to futures prices, there is an 85.7% possibility that the Fed will increase interest rates by 25 basis points at its meeting on May 3.
Bostic, the president of the Atlanta Fed, also stated that he favors one more 25bp rate increase followed by a break. According to Bostic, some of the Fed's duties may be accomplished by tightening lending conditions.
The US Dollar Index remained stable at 101.96 despite increasing worries that major central banks may raise interest rates again. The USD/CAD pair benefits from a slight rise in the US dollar.
It is a busy day on the US economic calendar when looking ahead to the US session. The key drivers will be the data for the April Philly Fed Manufacturing Index and the significant US jobless claims statistics.
Oil Continues to Decline as USD/CAD Reacts
Oil prices fell to a new monthly low on concerns that rising borrowing rates would slow economic development and reduce fuel demand.
WTI crude oil fell 1.68% to 77.91. Therefore, oil prices declined as markets revised their expectations for demand this year amid signs of slowing economic growth and growing wagers on more rate rises from significant central banks. The Dollar's strength also weighed on crude prices.
The commodity-linked Canadian Dollar is being held back from gaining due to the drop in oil prices. It is beneficial for USD/CAD.
Canada Prepares for Interest Rate Reduction
Canadian housing starts for March fell 11% domestically, slowing the trend that had been rising after the sharp rise in borrowing prices. Additionally, Canadian producer prices decreased 1.8% year-over-year after increasing 1.4% the previous year.
The y/y figure dropped into negative territory in the Canadian PPI statistics, highlighting the change in Canadian pricing pressures. Moreover, the drop confirms the Bank of Canada's prediction that CPI inflation will drop to 3% this summer and may pave the way for a rate reduction.
It wouldn't be surprising if the Canadian central bank led the way in rate cuts after being the first major central bank to raise rates this cycle. As risk aversion, amid concerns over rate cuts, puts pressure on the Canadian Dollar, USD/CAD rises. For further clarity, traders will focus on the BOC Gov Macklem Speaks later in the day.
Daily Technical Levels:
Support Resistance
1.3407 1.3492
1.3354 1.3522
1.3323 1.3576
Pivot Point: 1.3438
USD/CAD – Technical Outlook
The USD/CAD pair experienced a successful rally, breaking through the downward channel's resistance and paving the way to reach the primary anticipated positive target at 1.3500.
This strengthens the prospects for further gains in the coming sessions, with a breach of the mentioned level potentially extending the bullish wave towards 1.3590.
The 50-day exponential moving average (EMA50) underpins the price and bolsters the likelihood of additional gains in future sessions. However, breaking below 1.3410 would halt the current bullish momentum and push the price to test the critical support at 1.3350 before the next trend can be determined.
Related:
* EUR/USD Price Analysis – April 20, 2023