USD/CAD PRICE OUTLOOK: CANADIAN DOLLAR MIRED BY FED, OIL PRICES
- USD/CAD has pulled back 200-pips with the Canadian Dollar reversing recent weakness
- Canadian Dollar appears to be benefiting from higher oil prices and a broadly softer USD
- USD/CAD price action might resume its advance as Federal Reserve taper risk still lingers
USD/CAD price action has pulled back over the last couple of trading sessions as volatility normalizes in the wake of the Fed’s hawkish pivot last week. Recent crude oil price gains have likely helped the Canadian Dollar strengthen and regain lost ground against its USD peer too.
USD/CAD PRICE CHART: DAILY TIME FRAME (25 JAN TO 24 JUN 2021)
USD/CAD now trades about 200-pips below its month-to-date swing high around the 1.2475-price level. Selling pressure seems to be subsiding now, however, as USD/CAD bulls look wrestle back control. This appears to align with a defense of technical support around the 38.2% Fibonacci retracement level of USD/CAD’s monthly trading range. That said, the Canadian Dollar could weaken once again and send USD/CAD price action toward the descending trendline highlighted on the chart above.
Invalidating this technical obstacle has potential to bring April highs into focus. Reclaiming the short-term 8-day simple moving average could warrant more credence for this scenario. On the other hand, closing out this week near the lows might increase the odds of a deeper pullback toward the 1.2200-handle. This could correspond with a bearish MACD crossover.
— Written by Rich Dvorak, Analyst for DailyFX.com
Connect with @RichDvorakFX on Twitter for real-time market insight
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