The USDCAD pair fell below 1.30 mark overnight as US treasury yields retreated post hitting new highs resulting in US greenback weakening in broad market. While US greenback had recovered some ground in early Asian market hours owing to disappointing Canadian housing stats data, the upward move was short lived as Canadian dollar has regained upper hand. The weakness surrounding US Greenback can also be attributed to US President Donald Trump’s latest dig at Fed rate hike decision and crude oil price action in global market. As of writing this article, the USDCAD pair is trading near flat at 1.2952 up 0.05% on the day after hitting an intra-day low at 1.29264 earlier today.
Upbeat Crude Oil Price in Spot Market to Support Loonie’s Momentum Today
While crude oil price action saw some downside price action in early Asian hours owing to supply concerns stemming from looming Iran sanctions, spot market saw crude bulls get positive support from news that over 40% of US oil production was shut down owing to evacuation of personnel from major crude oil rigs in US gulf of Mexico. This upbeat price action greatly underpinned commodity linked currency Loonie during late Asian hours and European market hours today resulting in pair hitting intra-day lows. Analysts are of divided opinion over impact of US President Donald Trump’s comments yesterday where he said the central bank is going too fast in raising rates when inflation is minimal and government data points to a strong economy which traders believe was trigger for USD’s decline in broad market against major currencies.
News that IMF downgraded growth forecast for US and China owning to ongoing trade war was another factor that pressured US Greenback in broad market today. From technical standpoint, the pair extended overnight rejection slide from 50% Fibonacci retracement level of the 1.3227-1.2782 downfall, forming a bearish double-top chart pattern on the 1-hourly chart. A subsequent fall below 38.2% Fibonacci level and 100-hour SMA, coupled with negative technical indicators on the mentioned chart adds credence to the bearish formation. Hence, the downfall seems more likely to get extended towards testing 200-hour SMA, currently near the 1.2900 handle, which if broken will confirm a near-term bearish breakdown.
This article was originally posted on FX Empire
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