Yesterday, we had mentioned in our forecast of how the USDCAD pair was likely to run into a lot of selling in the 1.29 to 1.30 price region and that is why we had warned out traders not to get carried away and get ready for a correction. This is what happened yesterday as the dollar fell lower all across the board.
USDCAD Moves Lower
We saw the pair move lower during the course of the day and it was especially hit in a strong manner by the announcement of tariffs on the import of steel and aluminium by the US. This has led to stocks falling across the world and it has also increased the risk sentiment in the markets due to the fear that it could lead to a trade war between the various global powers. China has already expressed displeasure over the move and it is widely expected that the repercussions are likely to continue in the short term.
This is likely to see the pair come under pressure during this period and we are already seeing the effects of that as the pair has dropped from the 1.29 region to trade in the mid-1.28s over the last few hours. But again, we have to say that the bulls are still in control of the pair and it is likely that the dollar would continue to move up in the medium term which means that the pair is likely to move higher and every opportunity to go long on this pair should be utilised fully.
Looking ahead to the rest of the day, we have the GDP data from Canada and the bears in the pair would be hoping for some strong data which would once again ignite the chances of a rate hike from the BOC in the near future. If that does not happen, then we are likely to see the pair move higher back through 1.29 once again.
This article was originally posted on FX Empire
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