Canadian Dollar Price Forecast: USD/CAD Holds Support as USD Drives
Canadian Dollar, CAD, USD/CAD Price Forecast:
- The Canadian Dollar has been very strong of recent, helped along by continued strength in Oil prices as discussed by our own Justin McQueen earlier this morning.
- USD/CAD put in a test at the 1.2500 psychological level last week, but bulls following the falling wedge for topside breakouts may have to wait for a bit longer.
- The analysis contained in article relies on price action and chart formations. To learn more about price action or chart patterns, check out our DailyFX Education section.
It’s been a busy day across the US Dollar as comments from FOMC Chair Jerome Powell have sent both bonds and equities for a ride. Currencies, however, have been relatively calm by comparison. The US Dollar has pushed up for a test of the February high, however, and this highlights a big data point for tomorrow with the release of Non-farm Payrolls figures.
USD/CAD, however, has not set a fresh high nor are buyers pushing up for tests of significant resistance. There have been some bullish items, such as a hold of a key support level around 1.2622, or the longer-term falling wedge formation that remains in-place. Falling wedges will often be approached with the aim of bullish reversals; and in this case, that would be looking at a reversal of the trend that’s been building for almost a year now.
USD/CAD Daily Price Chart
While the longer-term falling wedge could keep bullish themes as an attractive option, a disconcerting item that must be encountered by USD/CAD bulls is the fact that the US Dollar is setting a fresh high but USD/CAD is not. This is owed to CAD-strength, helped in part by strong Oil prices, and this had driven the pair down for a test of the 1.2500 psychological level just last week. This led into a strong bounce but that bullish push couldn’t continue as sellers merely pushed price action back to the Fibonacci level at 1.2622.
This could set up USD/CAD as an attractive option in the event of USD-weakness, allowing for the incorporation of what’s been a strong Canadian Dollar to go along with a weakening US Dollar. For USD-strength strategies, there may simply be more attractive venues elsewhere at the moment given the strength that’s recently been seen in Oil with has played a role in USD/CAD.
USD/CAD Monthly Price Chart
Chart prepared by James Stanley; USDCAD on Tradingview
--- Written by James Stanley, Strategist for DailyFX.com
Contact and follow James on Twitter: @JStanleyFX
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