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USD/CAD Daily Fundamental Forecast – September 19, 2017

Colin First
Updated

The USDCAD pair rose higher during the course of trading yesterday, something that we had warned of in our forecast. The pair seems to be forming a good base at the support region which lends itself to a bounce at this point of time. The market is also wary of a recovering dollar and that is why we are probably seeing a lot of profit taking by the shorts here.

Pair Rises Higher on Strong Dollar

The dollar has been strengthening across many of the currencies over the last 24 hours as the market begins to build up hopes for the FOMC tomorrow. Though the incoming data from the US has continued to be choppy over the last week or so, the fact that the inflation is improving could mean that the economy is recovering and on the right path for the Fed to begin considering rate hikes again and it is this belief that is supporting the dollar at this point of time.

USDCAD Hourly
USDCAD Hourly

We believe that the Fed cannot be as hawkish as the market expects it to and though we do believe that there are signs of a recovering economy in the US, it will take time to shows its effects and hence we think that the market is still not ready to accept a full dollar recovery as yet. This should keep the pair under consolidation for the short term with the base at around the 1.2050 region holding for now. This bounce should last for a day or 2 more before the downtrend resumes and the pair moves towards the range lows again.

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Looking ahead to the rest of the day, we do not have any major news from the US or Canada for the day and hence we can expect some consolidation in the USDCAD pair between 1.22 and 1.23 for the day.

This article was originally posted on FX Empire

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