The USD/CAD has produced a rather deep sea of volatility in the past week, and trading conditions this week may deliver additional opportunities for those who want to wager.
The USD/CAD is trading near 1.29750 as of this writing. However on the 14th of July the USD/CAD currency pair did climb to nearly 1.32208 with a rather quick flurry of trading as financial institutions reacted to Bank of Canada moves and U.S economic data. Traders who were caught in the swirl of volatility last week may want to brace for additional storms in the mid-term and could find additional opportunities to bet on the USD/CAD gyrations.
Commodity Prices are declining for the Moment and this Influences the Canadian Dollar
The highs attained by the USD/CAD in the middle of last week did reach marks last seen in November of 2020, but the Forex pair managed to seemingly hit a rather robust amount of resistance and produce a reversal lower. This morning’s trading has seen the USD/CAD selloff slightly lower, and the ability to fall below the 1.30000 level is important and should be watched as an indicator today and tomorrow.
- Bank of Canada raised its key interest rate by 0.75% last week, essentially matching U.S Fed hawkish rhetoric.
- Concerns about a global recession are factoring into speculative trading of the USD/CAD currency pair.
Technically if the USD/CAD is able to maintain its current stance under the 1.30000 it may tempt some speculators to try and sell in the short term. However, traders should not forget the USD/CAD has persisted within a strong bullish trend and this movement likely has not seen its last days quite yet.
While the Bank of Canada did mirror the U.S Federal Reserve regarding an interest rate hike of 0.75% last week, Canada is also being hit by concerns regarding lower commodity prices, which means volume demand for the Canadian dollar may less within international trade. Reactions by financial institutions could produce more volatile movements for the USD/CAD this week as they seek price equilibrium.
More Choppy Conditions are Likely to be demonstrated and Traders should be Cautious
The USD/CAD has proven to produce choppy conditions, but support levels have spurred on additional buying over the past handful of months. If the USD/CAD can maintain its current price range and the 1.29650 level is maintained, this could spark the notion that additional room for higher moves again could be generated near term.
The ability of the USD/CAD to climb above the 1.30000 mark last week saw sustained price action until hitting above the 1.32000 juncture. Another move above 1.30000 could be produced near term without too much surprise.
Canadian Dollar Short-Term Outlook
Current Resistance: 1.29980
Current Support: 1.29580
High Target: 1.30916
Low Target: 1.28900
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