USD/CAD Price Analysis – Dec 19, 2023

Daily Price Outlook

Despite the dovish remarks by the Bank of Canada (BoC) Governor Tiff Macklem and the modest US Dollar (USD) uptick, the USD/CAD currency pair failed to stop its losing streak and remained well offered around below the 1.3390 level. However, the reason for its downward trend could be attributed to the recent goodish recovery in Crude Oil prices, which tends to underpin the commodity-linked Loonie and contributes to the USD/CAD currency pair.

Bank of Canada's Rate Cut Hints and Market Impact

It's worth noting that the Bank of Canada's Governor, Tiff Macklem, recently hinted at the possibility of lowering interest rates in 2024. This news has softened the potential downsides in the USD/CAD pair. People in the market quickly reacted, expecting rate cuts to begin around April, with a total cut of at least 1% by the end of next year. This, in turn, is likely to support the USD/CAD pair. Although, the upticks were short-lived and temporary amid the recent recovery in Crude Oil prices, which usually benefits the Canadian Dollar linked to commodities.

US Dollar Outlook and Fed Presidents' Views on Rate Cuts

Furthermore, Chicago Federal Reserve (Fed) President Austan Goolsbee and Cleveland Fed President Loretta Mester recently disagreed with the market's predictions of early interest rate cuts. This follows New York Fed President John Williams's statement on Friday that it's too early to talk about rate cuts. Moreover, the geopolitical risks are boosting the USD's safe-haven status against the Canadian Dollar. Traders are cautious about making big bets on the USD/CAD pair and are waiting for the latest consumer inflation figures from Canada for clearer direction later in the North American session.

Thus, the mixed views from Fed officials on early rate cuts and geopolitical risks favoring the USD's safe-haven status against the Canadian Dollar are making USD/CAD traders cautious. They're awaiting Canada's consumer inflation figures for clearer direction.

USD/CAD - Technical Analysis

The USD/CAD pair on December 19th exhibits a subtle yet complex trading pattern in the forex market. Currently, it records a marginal decline of 0.05%, trading at 1.3393. This level of trading activity indicates a cautious market sentiment towards the currency pair.

Analyzing the 4-hour chart, the pivot point is established at 1.3180. The pair faces immediate resistance at 1.3277, with further resistance expected at 1.3450 and 1.3550. On the other hand, support levels are found at 1.3012, followed by 1.2847 and 1.2670. These key price levels will be critical in dictating the near-term trajectory of the USD/CAD pair.

The technical indicators provide a nuanced view of the pair's potential direction. The Relative Strength Index (RSI) stands at 38, suggesting a bearish sentiment as it falls below the neutral 50 threshold. However, the Moving Average Convergence Divergence (MACD) presents a value of 0.00062 against a signal line of -0.00373, hinting at possible upward momentum. This contrast in indicators underscores the current market uncertainty.

The 50-Day Exponential Moving Average (EMA) at 1.3391 closely aligns with the current trading price, indicating a balanced market outlook. Notably, the Loonie has entered an oversold zone, and the closing of candles over the $1.3350 level could pivot the pair towards a bullish bias today.

In conclusion, the overall trend for the USD/CAD pair appears to be bullish above the 1.3390 level. The short-term forecast suggests that the pair may test higher resistance levels in the upcoming sessions, particularly if it sustains above the critical EMA and support points. Investors and traders should closely monitor these technical indicators and key levels for insights into potential market shifts.

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