Canadian Dollar Forecast: USD/CAD Price Nears Decisive Breakout Zone
Canadian Dollar Outlook: USD/CAD Price, Analysis and Chart
- Short-term uptrend remains in place, but chart signals are mixed.
- Resistance zone nears, however sentiment is bullish.
USD/CAD Trend Remains Positive
The Canadian dollar continues to weaken against its US counterpart with the move aided by market expectations that the Bank of Canada will cut interest rates early in 2020 from its current rate of 1.75%. Expectations of a cut at the December 4 central bank meeting have faded slightly, but the market now sees the Bank of Canada loosening monetary policy early next year after having kept interest rates unchanged since late October 2018 to help boost slowing growth.
USD/CAD’s short-term trend remains pointing higher with price action restricted within an upward channel started in late-October. Any pullbacks have offered fresh long opportunities although traders need to note the changing set-up in the daily chart. While the pair are now trading above all three moving averages and continue to make short-term higher lows, the CCI indicator shows USD/CAD now in overbought territory. The chart also highlights a cluster of old highs situated around 1.3350 and the five-month high at 1.3383 made on September 5. If this level is closed above, the recent set of higher lows from early June will be broken, giving the pair another bullish push. Downside support starts around the 200-dma at 1.3267 ahead of the 20-dma and trend support channel between 132.30 and 1.3240.
IG Client Sentiment shows that traders are 76% net-shortUSD/CAD, a bullish contrarian bias, while the latest Commitments of Traders report (CoT) show professional traders are continuing to buy US dollars and sell Canadian dollars, the latter quite heavily.
Later in today’s session, US consumer confidence for November will be released, before a raft of US data release on Wednesday, ahead of the US Thanksgiving holiday. On Friday, traders will get the latest Canadian GDP data, another potential pinch point for USD/CAD.
For all economic data and events, please see the DailyFX Calendar.
USD/CAD Daily Price Chart (January – November 26, 2019)
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