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USD/CAD Daily Price Forecast – USD/CAD Rebounds Post Hitting 45 Day Low But Lacks Momentum To Make Bullish Breakout

Colin First

The USDCAD pair regained some positive traction on Wednesday and built on overnight modest rebound from 1-1/2 month lows. On Tuesday, the pair weakened back below the key 1.30 psychological mark in reaction to upbeat Canadian economic data, especially stronger than expected monthly GDP growth figures, albeit managed to find some support near 100-day SMA. A combination of factors, ranging from a follow-through US Dollar demand and weaker crude oil prices, provided a minor lift through the early European trading session on Wednesday. After dropping below the 1.30 mark in the early trading hours of the NA session on Tuesday, the USD/CAD pair recovered to 1.3050 but failed to extend higher as the rebounded crude oil prices helped the commodity-sensitive Loonie find demand. The data from Canada on Tuesday showed that following April’s dismal 0.1% growth, the economy expanded by 0.5% in May to surpass the market estimate of 0.4%. Statistics Canada also announced that the industrial product price index and the raw materials index both rose 0.5% in June. As of writing this article, USDCAD pair is trading at 1.3025 with 0.14% increase in value.

US Greenback Fails To Gain Upper Hand Despite Trade War Woes Giving USD Bullish Boost

The USD/CAD pair regained some positive traction on Wednesday and built on overnight modest rebound from 1-1/2 month lows. On Tuesday, the pair weakened back below the key 1.30 psychological mark in reaction to upbeat Canadian economic data, especially stronger than expected monthly GDP growth figures, albeit managed to find some support near 100-day SMA. A combination of factors, ranging from a follow-through US Dollar demand and weaker crude oil prices, provided a minor lift through the early European trading session on Wednesday. After dropping below the 1.30 mark in the early trading hours of the NA session on Tuesday, the USD/CAD pair recovered to 1.3050 but failed to extend higher as the rebounded crude oil prices helped the commodity-sensitive Loonie find demand. The data from Canada on Tuesday showed that following April’s dismal 0.1% growth, the economy expanded by 0.5% in May to surpass the market estimate of 0.4%. Statistics Canada also announced that the industrial product price index and the raw materials index both rose 0.5% in June. As of writing this article, USDCAD pair is trading at 1.3025 with 0.14% increase in value.

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Despite the latest report that the Trump administration was planning to impose higher tariffs on around $200 billion worth of Chinese imports, the greenback edged higher and remained supportive of a mildly positive tone surrounding the major. Adding to this, crude oil prices continued to be weighed down by overnight API report, which showed an unexpected rise in the US stockpiles and eventually undermined demand for the commodity-linked currency – Loonie. The uptick, however, lacked any strong conviction as investors seemed reluctant to place any aggressive bets ahead of today’s key event risk – the latest FOMC monetary policy decision, due to be announced later in the day. In the meantime, the US economic docket – featuring the release of ADP report on private sector employment and ISM manufacturing PMI will be looked upon to grab some short-term trading opportunities. Immediate resistance is pegged near 1.3040 horizontal level, above which the recovery move could get extended towards overnight swing high, around the 1.3096-1.3100 region. On the flip side, weakness below the 1.30 handle might continue to find support near the 1.2985 region (100-day SMA), which if broken might pave the way for an extension of the pair’s near-term bearish trajectory.

This article was originally posted on FX Empire

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