USDCAD pair has been on steady downward price action since last night as US dollar lost some ground over conflicting headlines. Financial Times reported that Trump Administration had rejected a request from the Chinese government for preparatory talks later this week ahead of next week’s high-level talks owing to lack of progress. This caused US equities to slide in early American market hours which caused US dollar to lose ground in the broad market. However, the report was shortly denied by as Larry Kudlow, head of the National Economic Council who stated that report from financial times was false and trade talks are proceeding on a smooth and positive note.
Crude Oil Rebound Drags Price Near Critical Support Price Levels
Larry’s comments inspired some positive sentiment and led to some risk-on trading in forex market early in the day. Further, the decline was supported by rebound in crude oil price action in the broad market. Crude oil price gained momentum on renewed risk appetite and trade talk related optimism following Larry Kudlow’s comments and crude oil price got another boost in Asian market hours as news hit market that Chinese government would step up fiscal spending this year to support its economy which is interpreted in broad market as hopes for steady demand of crude oil in China, the biggest importer of crude oil.
Being a crude oil-linked currency, Loonie gains positive price action whenever the oil market sees positive price action. As of writing this article, USDCAD pair is trading at 1.3319 down by 0.27% on the day. Moving forward investors await retail sales data from Canada for short term profit opportunities as the US calendar is silent for the day. While Dollar bulls lacked strength resulting in a sharp decline, risk-averse trading activity in some forex pairs and major equity markets underpin US Dollar owing to its recent status as a safe haven asset. When looking from a technical perspective, the price lacks clear directional bias as it is trading near critical support level for now. A breach below 1.3300 handle will lead to sharp declines giving CAD an edge over US dollar while rebound back above 1.3350 will give USD upper hand as risk-averse trading activity in broad market underpins dollar bulls to some extent.
This article was originally posted on FX Empire
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