The USDCAD pair is now trading locked inside a short price range as both sides of the pair lack decisive trigger. The pair started for the week on dovish note supported by increased risk appetite as the US government reopened temporarily and the dollar was also weakened over headlines which hinted at a possibility of the U.S. Fed deciding to stop rate hike plans for 2019. However due to investor sentiment in broad market turning dovish and most risk assets seeing sharp sell-off activity US dollar gain slightly from intra-day lows. Crude Oil price rebound from recent lows on news of increased demand from China as third party refiners decided to stock up on crude oil from the Middle East and Africa given low price in the broad market. This helped limit US dollar’s recovery in the broad market.
Crude Oil Price Rebound Underpins Loonie Bulls
The pair has since entered into consolidative action near its highs set yesterday and dollar bulls continues to receive further support broad market as investors choose to maintain cautious stance ahead of major geo-political events scheduled across the week. Further investors caution increased as the U.S. Justice Department decided to reopen legal proceedings against Chinese telecom giant Huawei despite high level trade talks between China and U.S. set to begin tomorrow. This is viewed by many as the U.S. attempt to force Chinese into accepting trade deal and conceding on key issues unresolved so far. However, risk appetite increased during European market hours as investors showed some willingness to participate in the event-driven rally for short term profit opportunities.
As of writing this article, USDCAD pair is trading at 1.3256 down by 0.05% on the day. Loonie bulls are further supported by sharp rebound in crude oil price. US spot crude price in the broad market rose by 2% as news of U.S. sanctions on Venezuelan Crude oil hit the market. This helped commodity-linked currency Canadian Loonie to maintain its edge against US Dollar. But the same is not powerful enough as investors believe that the U.S. crude oil production and supply could still offset any loss created from Venezuelan crude supply disruption resulting in long term outlook of crude oil remaining dovish limiting Loonies gain. Moving forward, the pair needs to breach support at mid 1.31 handle for Loonie to establish stable rally in its favor, while US dollar needs to breach resistance at 1.3295 for Greenback to establish a sustain bullish rally.
This article was originally posted on FX Empire
More From FXEMPIRE:
- Silver Price Forecast – Silver markets continue to grind higher
- Gold Price Prediction – Gold Breaks Out as Momentum Turns Positive
- GBP/JPY Bullish Bounce Expected as Long as W L3 Camarilla Holds
- Gold Price Futures (GC) Technical Analysis – January 29, 2019 Forecast
- GBP/JPY Price Forecast – British pound recovers on Tuesday
- E-mini Dow Jones Industrial Average (YM) Futures Technical Analysis – January 29, 2019 Forecast