The USD/CAD currency pair advanced to retest the current monthly highs of about 1.3196 on Wednesday before pulling back to settle at around 1.3180 after reports emerged suggesting that US-China trade talks could be postponed.
The currency pair has been on a bullish run over the last two sessions (including Wednesday), which started after bottoming at around 1.3114 on Tuesday morning. However, the upside potential faces major technical resistance at 1.3200.
USD/CAD Fundamentals Overview
From a fundamental pers[ectove, the USD/CAD currency pair is trading at the back of a busy week in the US market. However, the most significant news on Wednesday came when it emerged that the Trump-Xi meeting could be postponed to December. This could add more pressure to the Canadian Dollar, which relies heavily on the performance of the Chinese economy.
Furthermore, the oil-pegged loonie will also experience pressure with the latest OPEC oil demand outlook report signaling a potential weakness in the market. However, with this week’s US Markit PMI’s missing expectations this could provide the CAD with an opportunity to recoup some losses against the greenback. But traders could focus more on the ISM non-Manufacturing data which beat expectations of 53.5 with 54.7.
Canada’s latest data on exports and imports for September missed expectations of 50.35 and 50.98 respectively with 49.78 and 50.76.
USD/CAD Technical Analysis (the 60-min Chart)
Technically, the USD/CAD currency pair appears to have recently bounced off the overbought boundary of the RSI indicator in the 60-min chart. The pair is trading several pips above the current 100-hour and 200-hour MA lines, which indicates a short-term bullish bias.
Therefore, the bears will be targeting potential pullback profits at around 1.3167, 1.3151 or lower at 1.3131. On the other hand, the bulls will hope for a continued bullish run towards 1.3196, 1.3208 or higher at 1.3227.
USD/CAD Technical Analysis (the Daily Chart)
In the daily chart, the USD/CAD currency pair appears to have taken a bearish outlook since the start of the year coming off a 15-month bull-run that dates back to September 2017. This year’s turn of events gives the bears the edge in the long-term trading market.
Therefore, the bears will be looking to pounce on profits at around 1.3136 or lower at 1.3036. On the other hand, the bulls will hope that the recent rebound continues well above the key resistance level at 1.3254 and higher at 1.3344.