Canadian Dollar Forecast: USD/CAD Short-Term Weakness Likely to Continue
Canadian Dollar (CAD) Price, Chart and Analysis
USD/CAD Price Action Capped by Short-Term Moving Average
The recent rebound in USD/CAD may have played out in the short-term as the pair struggles to test recent high prints. The daily chart shows USD/CAD now below all three moving averages with the shorter-dated 20-dma now acting as resistance after the pairs false break higher. The 20-dma has acted as resistance since early December and highlights the ongoing weakness in USD/CAD. A series of lower highs also dominate the chart. The pair is likely to re-test an old swing low at 1.3016 before setting its sight on the December 31 15-month low at 1.29518, while short-term resistance at 1.3080 and the January spike high at 1.3105 may prove difficult to break.
The Canadian dollar continues to benefit from a stable interest rate background with market indicators suggesting only a 50% chance of a rate by the end of 2020. The next Bank of Canada rate decision – January 22 - will provide further details of the central bank’s view of the economy.
USD/CAD Daily Price Chart (March 2019 – January 16, 2020)
The US dollar basket (DXY) chart also highlights weakness in the greenback. Since making a fresh two-and-a-half year high of 99.228 on October 1 last year, the US dollar basket has made a sequence of lower highs and lower lows, a bearish chart pattern. The 50-day moving average broke through the 200-dma on December 30, making a bearish death-cross, capping upside momentum. Later today, US advanced retail sales for December are expected to tick-up to 0.3% from 0.2% in November, and any miss could see the US dollar weaken further.
US Dollar Basket (DXY) Daily Price Chart (May 2019 – January 16, 2020)
What is your view on the Canadian Dollar (CAD) – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author at firstname.lastname@example.org via Twitter @nickcawley1.
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