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Canadian Dollar Forecast: USD/CAD Risks Catapulting Higher as Reversal Unfolds

Canadian Dollar Forecast: USD/CAD Risks Catapulting Higher as Reversal Unfolds

2020-01-09 12:10:00
Justin McQueen, Analyst
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CAD Analysis and Talking Points

  • USD/CAD | Reversal Underway, Eyes on 1.3100
  • Reduced US-Iran Tensions Weigh on Oil Prices

USD/CAD | Reversal Underway, Eyes on 1.3100

While tensions remain high between the US and Iran, they appear to be easing slightly with the US refraining from taking further action. Consequently, oil prices have pared their initial upside, which in turn has weighed on commodity linked currencies, such as the Canadian Dollar. That said, USD/CAD looks attractive for a reversal, having broken back above the 1.3000 handle. The pair now tests 1.3053, which marks the 23.6% fib, whereby a closing break above raises scope for a move towards 1.3100-10.

Aside from geopolitics, eyes will be on BoC Governor Poloz at 19:00GMT (14:00ET) who is scheduled to take part in a fireside chat. There is a risk that the Governor could provide a more cautious outlook from a domestic standpoint following the recent economic growth data, where Canada showed a contraction in growth for the first time in 8 months at -0.1%. Elsewhere, focus will also be on the Canadian jobs report on Jan 10th and Business Outlook Survey on Jan 13th.

Support

Resistance

1.3000

-

1.3053

23.6% Fib

1.2950

-

1.3100

-

1.2947

2019 low

1.3167

50% Fib

USD/CAD Price Chart: Daily Time Frame (Aug 2019 – Jan 2020)

Canadian Dollar Forecast: USD/CAD Risks Catapulting Higher as Reversal Unfolds

Source: IG Charts

--- Written by Justin McQueen, Market Analyst

To contact Justin, email him at Justin.mcqueen@ig.com

Follow Justin on Twitter @JMcQueenFX

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