The USD/CAD pair managed to gain some of its losses back over the course of trading yesterday. The pair had been down in the doldrums and it appeared that it would need a big change in the fundamentals for the pair to gain any sort of momentum to the upside. But on the other hand, we had mentioned in few of our forecasts that the dollar seemed to be a bit oversold and with some of the major moves happening during times of low volume, there was a chance of a revival.
USDCAD Awaits Dollar Revival
This revival in the dollar was what the market has been looking forward to over the last couple of weeks but it has not happened so far. Even yesterday, the dollar needed a boost through the comments of Trump who said that he believed that the dollar would be strong due to the strength of the incoming economic data. This seemed to provide some light at the end of the tunnel for the dollar bulls who used this opportunity to push the prices higher.
The prices pushed through the 1.2350 region and headed towards the 1.2400 region during trading yesterday as the dollar got a well timed boost. But the pair has not been able to break through that region and it is important to watch for the close in the pair today to see if the dollar is able to make its strength stick or whether the bears in the pair would take over once again and push the prices lower to close the week. This could determine the short term direction for the pair.
Looking ahead to the rest of the day, we have the CPI inflation data from Canada and we also have the advance GDP data from the US. Both of these data points are likely to bring in a lot of volatility and it is advisable for the traders to stay on the sidelines and allow the pair to sort out the next direction before jumping in.
This article was originally posted on FX Empire
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