The USDCAD pair is seeing steady uptrend action today, having hit 3-week lows last week. News hit the market last Friday in American market hours that US Federal Reserve is planning to stop its balance sheet shrinking activity which began two years ago. This news was interpreted by many traders and investors as a sign that Fed has decided to stop its rate hike cycle instead of delaying rate hike plans for 2019 as announced earlier. This triggered a sharp sell-off during American market hours resulting in steep declining with pair hitting 3-week lows near the close of trading session. However, the pair has slightly recovered from said loss as trading activity turned slightly dovish in the broad market today.
Crude Oil Decline Limits Loonie’s Gains
Further news hit the market that US President Donald Trump has agreed to temporarily re-open US government for three weeks and optimism surrounding this headline also inspired positive price action surrounding US Dollar in broad market helping the pair rebound from Friday Lows. Further Crude oil price also suffered steep losses which affected price action of commodity-linked currency Loonie in the broad market. However, the recovery is very limited as news of renewed demand from Chinese independent refiners stocking up on crude boosting demand from China helped Loonie bulls find strength and limit USD’s gains. As of writing this article, USD CAD pair is trading at 1.3260 up by 0.33% on the day.
On the release front, both US and Canadian calendar are silent for the day. Given the lack of macro data, the pair is expected to continue its range-bound price action across American market hours with Crude oil price and broad market sentiment surrounding US dollar dictating the momentum. The focus is on when looking from a technical perspective, short term outlook remains bearish. The pair needs to breach resistance at 1.3295 handle for continued positive price action. On the flip side, a breach below 1.3230 will result in price heading back towards 3-week low at 1.32030 and further decline will result in price heading towards lower half of 1.31 handle.
This article was originally posted on FX Empire
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