USD/CAD Downward Pressure Forces Pair to Pull Back

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The USD/CAD currency pair extended losses late on Friday morning after Thursday’s late pullback. The pair trended lower to trade at 1.3306 from Thursday’s close of 1.3334, showing increasing downward pressure.

USD/CAD Fundamental Analysis

Bank of Canada’s deputy governor Carolyn Wilkins made no comments on a potential rate hike and this seemed to impress loonie buyers. Furthermore, with oil prices inching higher on the day, this aided CAD’s sentiment against the greenback thereby pushing the pair lower.

However, with Canada’s vulnerability to potential trade wars between the US and China, the loonie remains in a very fragile position with more geopolitical uncertainties around the world threatening the occurrence of another global financial crisis.

A negative outcome from the US-China trade talks is foreseen as a potential headwind for the CAD, which could trigger a rebound in USD/CAD.

USD/CAD Technical Analysis (the 240-min Chart)

From a technical perspective, the USD/CAD currency pair appears to be on a bearish movement that began at the start of the week. This ended a bullish run that started at the beginning of the month.

Based on the current exchange rate level, the pair seems well poised for a continuation of the current bearish movement but a rebound cannot be ruled out entirely. As such, the bears will look to aim for profits at around the 1.3270 level while the bulls will hope for a quick rebound towards the 1.3340 level.

With that in mind, the USD/CAD currency pair is set for a very interesting week ahead as we enter the second half of the month.

USD/CAD Technical Analysis (the Daily Chart)

Based on the daily chart, the long-term view of the USD/CAd currency pair appears to suggest that while a continuation of the current pullback is expected to take the pair towards the current support at around 1.3173, a journey back top could take place very soon.

As such, while the bears target 1.3173 long-term, the bulls will be assessing opportunities at around the 1.3458 level.

In summary, the USD/CAD currency pair is currently on a downward movement partly due to strengthening oil prices. However, long-term forecasts suggest that the bulls maintain control with the greenback expected to strike back in the foreseeable future.

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