The USDCAD pair achieved the first target of 1.26 and then has gone into a consolidation mode over the last 24 hours. The pair has been volatile over the week but all of the volatility has been on the bullish side as it has risen from the lows of the range at the 1.23 region and has managed to climb itself over the 1.25 region and now trades in the highs of the range as of this writing.
USDCAD Reaches 1.26
The climb higher has been facilitated by 2 factors, one of which is the dollar strength that has been seen across the board. The CAD and the dollar seem to be in a tussle with their respective central banks looking to hike rates whenever they get an opportunity. They have been alternating with each other over the last 6 months as far as rate hikes are concerned and with the Fed looking to raise rates next month as well, it looks as though the dollar is likely to have the upper hand at this point of time. This has helped the pair to move higher.
On the other hand, the CAD has been weakened by the low oil prices which have been falling since the beginning of the week. The data from Canada remains steady at best and hence there has not been much support from the fundamentals or the economic news for the CAD and that is why we have been seeing the CAD moving lower. But we do not believe that a trend has set in as yet and we would like to wait for sometime before there is confirmation of the trend.
An important piece of data that is likely to determine the trend would be coming in today as the employment data from Canada is set to come in a bit later. If this comes in stronger than expected, then we are likely to see the pair move back towards the support region around 1.25 which is likely to hold the moves for now. On the other hand, if it is weaker, then we should be looking at 1.28 in the short term.
This article was originally posted on FX Empire
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