The USD/CAD currency pair continues to trade in a sideways movement following what has been a mixed week for both the loonie and the greenback. At 1.3435, the pair is pegged around in the middle of the current short-term trading range of about 1.3400 and 1.3500.
The currency pair has been trading within this range since late April and this is unlikely to change following the recent round economic of events.
USD/CAD Fundamentals Overview
From a fundamentals perspective, the USD/CAD currency pair remains in the balance with both currencies under pressure. The loonie is pegged to oil prices and given yesterday’s plunge in crude oil price, things are not looking good.
On the other hand, the greenback is under pressure from falling US Treasury Yields, which are sending negative sentiments to the US stock market and the economy. Furthermore, on Friday the non-durable goods report failed to impress after falling short of expectations.
This pressure was compounded by the ongoing trade tensions between the US and China with the Asian economic giant threatening to raise tariffs on US goods worth $60 billion in annual exports.
USD/CAD Technical Analysis (the 240-min Chart)
Technically, the USD/CAD currency pair appears to be consolidating in an ascending wedge, which has recently flattened at both sides. The flattening of this trend has pushed the pair to a short-term sideways movement, which has created some compelling trading opportunities.
The bulls will target profits at around the 100-period MA level in the 240-min chart at 1.3453 while the bears will target the 200-period MA level at 1.3418 in the short-term. Intermediate and long term opportunities can also be found for both sets of traders at 1.3486 and 1.3500 for the bulls and 1.3400 and 1.3369 for the bears.
USD/CAD Technical Analysis (the Daily Chart)
In the daily chart, the consolidation pattern is clearer and appears to be forming on the base of an ascending channel that dates back to August last year. This suggests that a major breakout could be around the corner.
Nonetheless, traders will look at the Fib retracements based on the most recent major plunge, which create opportunities at 76.40% Fib level for the bulls and 50% Fib level for the bears.
In summary, the USD/CAD currency pair appears to enjoy a long-term bullish bias. However, given the current consolidative shape, the bears might be expecting a major bearish breakout in the pair.