The USDCAD pair has been moving lower in line with the general weakness in the dollar that we have been seeing all across the markets over the last 24 hours. This is expected to continue in the short term which would mean that the 1.25 region is likely to come under attack anytime soon. The bulls should be disappointed with what has been transpiring in this pair over the last few days.
USDCAD Moves Down on Weak Dollar
The bulls would have been hopeful that with some support from the incoming data from the US and also from the weakening oil prices, they would be able to take advantage and push the pair higher. For sometime last week, this plan seemed to work as the oil prices were weak or at best steady and this helped the pair to move towards the 1.26 region in due course of time. It only needed some support from the NFP data for the pair to move up for the short term but that is where the dollar was found lacking.
The NFP data came in much weaker than expected and there was not much support from the wages data as well, though it came in stronger, and this has now raised serious doubts on whether the Fed would still be able to hike rates later in the year. The market had already started to price in the rate hike and hence this would have been a big blow for the dollar bulls.
It was a holiday in both the US and Canada yesterday and so there was not much liquidity or volatility in this pair though the direction was pretty much down. With the holiday over and no economic news scheduled for the day, we can pretty much expect quite a bit of action in this pair for today which should lead to some choppy trading on either side of 1.25.
This article was originally posted on FX Empire
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