The USD/CAD pair reversed an early dip to the 1.2900 neighborhood and is now looking to snap three consecutive days of losing streak. Optimism over progress to revise the North American Free Trade Agreement (NAFTA), especially after the US-Mexico bilateral trade pact, kept benefiting the Canadian Dollar and dragged the pair to a fresh 2-1/2 month low on Tuesday. However, easing US Dollar selling pressure, following the upbeat release of Conference Board’s consumer confidence index, extended some support and helped the pair to bounce off lows. The greenback regained some positive traction on Wednesday and was seen as one of the key factors behind the pair’s modest intraday uptick of around 30-35 pips from the Asian session low level of 1.2903.As of writing this article, USDCAD is trading at 1.2930 up 0.03% on the day and the pair has so far remains well below 1.295 handle indicating possibility for range bound momentum in immediate future.
Canada Opening Diary Market For NAFTA Talks Greatly Helped CAD Solidify its Position
Meanwhile, a subdued action around crude oil prices did little to influence demand for the commodity-linked currency – Loonie, with the USD price dynamics turning out to be an exclusive driver of the pair’s momentum through the early European session. It would now be interesting to see if the pair is able to build on the attempted recovery move as the focus now shifts to the release of prelim US Q2 GDP growth figures and Canadian current account data for some fresh impetus. While USD saw positive influence from macro data and increase in treasury yields, the key factor that helped limit USD’s upside move and support CAD is news of new concessions made to US on NAFTA deal. Canadian government has said that it is open to make concessions on protected dairy market which accounts for 1.3% of Canadian GDP.
The current market situations sees investors in cautious tone surrounding USD ahead of US GDP data, while the Canadian dollar caught a fresh bid-wave following the reports that Canada is ready to give way for significant concessions in order to secure the NAFTA deal. CAD is expected to remain positive ahead of US GDP data, but the outcome of US GDP could give US Greenback a bullish boost until which the pair will continue to see range bound price action. Any subsequent up-move is likely to confront resistance near the 1.2960 level, above which the pair is likely to aim towards reclaiming the key 1.30 psychological mark. On the flip side, a sustained weakness back below the 1.2900 handle might now turn the pair vulnerable to extend the downfall towards testing the very important 200-day SMA support, currently near mid-1.2800’s.
This article was originally posted on FX Empire
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