USD/CAD Price Analysis – Dec 03, 2024
Daily Price Outlook
During the European trading session, the USD/CAD currency pair continued its bearish trend, remaining under pressure around the 1.4040 level, even hitting an intraday low of 1.4010.
This downward movement was largely driven by a weakening US dollar, which has been losing momentum amid growing expectations that the Federal Reserve could cut rates in December.
On top of that, speculation that OPEC+ may delay its plans to boost oil production has been supporting crude prices for a second consecutive day.
This, combined with a reduced likelihood of a significant rate cut by the Bank of Canada (BoC) in December, is weighing on the Canadian Dollar, further pressuring the USD/CAD pair.
Geopolitical Risks, Oil Prices, and US Economic Data Influence USD/CAD Movement
Despite a ceasefire deal between Israel and the Lebanon-based Hezbollah militant group, the geopolitical risk premium remains high due to the ongoing Russia-Ukraine conflict. This uncertainty continues to weigh on global markets.
At the same time, expectations that OPEC+ will delay plans to increase oil production are providing support to crude oil prices for a second consecutive day.
This, coupled with reduced expectations for a large rate cut by the Bank of Canada (BoC) in December, is putting pressure on the Canadian Dollar (CAD), which is a commodity-linked currency. As a result, the USD/CAD pair is seeing some downward pressure.
Meanwhile, the US Dollar Index (DXY), which tracks the greenback against a basket of currencies, is struggling to build on its recent bounce from a nearly three-week low.
The increased likelihood of the Federal Reserve cutting rates in December has weakened the dollar. However, investors are betting that US President-elect Donald Trump's expansionary policies could lead to higher inflation, prompting the Fed to keep rates higher for longer. This provides some support to US bond yields and, in turn, the USD.
Looking ahead, traders will focus on the release of the US JOLTS Job Openings data later today, which could offer short-term trading opportunities.
Meanwhile, the US economic data this week, including the Nonfarm Payrolls (NFP) report and Fed Chair Jerome Powell’s speech, will likely influence expectations for US interest rates. The outcome of Thursday's OPEC+ meeting will also be crucial for oil prices and could impact the USD/CAD pair.
USD/CAD – Technical Analysis
USD/CAD remains steady at $1.4058, registering minimal change for the session (-0.00%). The pair hovers just below the pivot point at $1.40893, reflecting indecision as the market consolidates after recent gains.
The 4-hour chart shows price action closely aligned with the 50 EMA at $1.40264, suggesting a delicate balance between bullish and bearish forces.
Immediate resistance is at $1.41291, a level that aligns with the upper end of the current range. A break above this resistance could push the pair toward $1.41776, a key psychological barrier.
On the downside, immediate support at $1.40242 is critical; a breach would likely expose $1.39821, with further declines potentially targeting $1.39489. The RSI stands at 54, indicating mild bullish momentum but no significant overbought or oversold conditions.
The technical landscape favors a cautious bearish bias, particularly if prices fail to reclaim the pivot level. A recommended trade strategy is to sell below $1.40584, targeting $1.40019 as the take-profit level, with a prudent stop-loss at $1.41090.
This setup leverages the pair's proximity to the 50 EMA and aligns with its recent inability to sustain a clear breakout.
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