USD/CAD Price Analysis – Sep 10, 2024

Daily Price Outlook

During the Asian session on Tuesday, the USD/CAD pair saw some upward movement, trading around 1.3571, thanks to growing demand for the US dollar.

This boost came despite crude oil prices struggling to maintain recent gains and dropping to their lowest levels since June 2023. The decline in oil prices is largely attributed to concerns about a possible economic slowdown in China, the world's largest oil importer.

Besides this, the Canadian dollar is facing pressure due to expectations of further interest rate cuts by the Bank of Canada, following disappointing Canadian jobs data from Friday.

These combined factors are giving the USD/CAD pair a lift, as traders navigate the impact of fluctuating oil prices and central bank policies.

CAD Struggles with Low Oil Prices and Rate Cut Expectations

On the Canadian dollar front, crude oil prices are struggling to extend their recent rebound and have fallen to their lowest levels since June 2023. This setback is mainly due to growing concerns about a potential economic slowdown in China, the world's largest oil importer.

Recent data from China reveals that oil imports were flat in August, compared to a 6.6% increase the previous month. This stagnation suggests weaker domestic demand, which is heightening market anxiety and weighing on crude oil prices.

In addition to this, expectations for more interest rate cuts by the Bank of Canada (BoC) are also affecting the Canadian dollar.

These hopes have been strengthened by disappointing Canadian jobs data from last Friday, which has weakened the Loonie further. As a result, the USD/CAD currency pair is benefiting from this situation, with the US dollar gaining traction against its Canadian counterpart.

USD Gains Support Amid Adjusted Fed Rate Cut Expectations and Upcoming Economic Data

On the US front, the US Dollar (USD) is gaining strength due to decreased expectations for a substantial 50 basis points interest rate cut by the Federal Reserve (Fed) in September. This change in outlook comes after mixed results from the recent US Nonfarm Payrolls (NFP) report.

As a result, the USD/CAD pair is finding some support. However, investors are staying cautious and are waiting to hear from Bank of Canada Governor Tiff Macklem and review the upcoming US inflation data before making any major decisions.

Meanwhile, the crucial US Consumer Price Index (CPI) report is set to be released on Wednesday, followed by the Producer Price Index (PPI) on Thursday.

These reports are expected to shape market expectations about the Federal Reserve's potential interest rate cut later this month and influence demand for the USD. Additionally, movements in oil prices will also play a key role in determining the next direction for the USD/CAD pair.

USD/CAD - Technical Analysis

The USD/CAD pair is currently trading at $1.35635, up 0.04%, hovering near a key pivot point at $1.3598. The pair has shown slight bullish momentum, supported by a relatively strong U.S. dollar.

However, the USD/CAD remains at a critical juncture, with price action confined between immediate resistance and support levels.

Immediate resistance stands at $1.3615, followed by stronger barriers at $1.3640 and $1.3662. If USD/CAD manages to break above $1.3615, it could open the door for further gains, with the 50-day Exponential Moving Average (EMA) at $1.3534 providing near-term support. The bullish bias remains intact as long as the price stays above this EMA level.

On the downside, immediate support is found at $1.3548, with the next critical levels at $1.3509 and $1.3483. If the pair fails to maintain momentum above $1.3548, selling pressure could increase, pushing the price toward $1.3509.

The Relative Strength Index (RSI) is currently at 57, suggesting neutral to slightly bullish momentum, but a dip below $1.3548 could weaken sentiment.

For now, the USD/CAD appears to be balancing between bullish and bearish pressures, with the $1.3598 pivot point serving as a key indicator for the next directional move. Traders should monitor these levels closely to identify potential entry and exit points.

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