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.