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USD/CAD Daily Forecast – Loonie may Correct Further as Trade Tensions Escalate

Nikhil Khandelwal

The Loonie remained consolidated for quite a while during the initial hours. Laterwards,  a fresh set of bids lifted the pair 10 pips, marking the day’s high near 1.3450 levels.

The pair had started lowering from its monthly lows near 1.3513 levels since last Friday post-U.S. announcement. President Trump mentioned that the U.S. would remove all the Aluminum-Steel tariffs imposed over Canadian imports. This proclamation had set an optimistic flag for the Canadian currency, elevating crude prices. The overall action had an opposite reaction onto the USD/CAD pair, pushing down the pair.

Canadian Foreign Minister mentioned that the reluctant Canadian approach of not to ratify the new NAFTA deal had helped them.  

The Crude prices had touched the month’s high near $63.93 per barrel amid positive CAD news and Middle East supply tensions. The latest update on the crude chart was majorly on OPEC-led supply cut threats.

Meantime, the U.S. Dollar Index uproars in the upper vicinity of its monthly chart. Though the  Greenback had opened up near 98.00 levels on this new week, the index was trading lower later. Investor concerns over the US-Sino trade capped the USD Index gains. China remains upset over U.S. action to blacklist Huawei. Today, Google suspended its Android business with Huawei. Many European Chipset Companies have reported stopping sending chips to Huawei. Hence, the impact on the Chinese Company would be massive, and China might retaliate to the same.            

In a nutshell, the US-Sino trade talks may appear to get worse, bringing down the Loonie. Additionally, the crude upsurge and positive CAD economic growth on account of tariff cut put more oil to the fire.

USD/CAD Influencing Events

The U.S. specific events occupy a major share in today’s economic calendar events. On the flipside, there are hardly any CAD events for this day. The most significant economic happening is Fed Chairs speech. Jeromy Powell will discuss the current economic scenarios in America. Furthermore, Chicago Fed will broadcast the April’s National Activity Index. This time the consensus estimates low numbers to come near negative 0.3 percent. Subsequently, in the later hours, the Fed’s Vice-Chair Richard Clarida will give his opinions about the interest rates and MPC decisions.

Technical Analysis

45-Minutes Chart

USDCAD 45 Min 20 May 2019

The Loonie remained low in the 45-Minutes Chart today. The USD/CAD pair created a fresh low near 1.3424 levels and later went upside around 1.3443 levels. The Loonie occurred in the lower vicinity of the Bollinger Bands (BB), alluding a bear call. All the significant Simple Moving Averages (SMA) was hovering above the pair. However, the 50-days SMA stood ahead of the 100-days and 200-days SMA, and this indicated a near term bullish stance over the Loonie.

4-Hours Chart

USDCAD 240 Min 20 May 2019

During the Asian session, the USD/CAD pair was hovering near 1.3440 levels. A support point near 1.3401 levels and the resistance line around 1.3513 levels awaits with the pair.  The Loonie showcased in the lower vicinity of the Keltner Channel (K.C.). And this refers to a bearish outlook among the traders. Whereas, the Relative Strength Index (RSI) was hovering near 47 levels, alluding moderate buying. The Moving Average Convergence Divergence (MACD) displayed negative levels today.

This article was originally posted on FX Empire