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Canadian Dollar (USD/CAD) Currency Pair Analysis – Can the Canadian Dollar successfully withstand the pressure on the US Dollar?
Main and general engines:
- Crude oil prices: Since Canada is a major oil exporter, any fluctuations in crude oil prices will directly affect the strength of the Canadian dollar.
- Monetary policy gap: Markets are closely watching any statements from the Bank of Canada and the Federal Reserve as interest rate expectations affect capital flows between the two currencies.
- Expected Jobs Data: Markets are awaiting important economic data from the U.S. and Canada this week, adding to caution and sideways trading.
Technical vision and expected scenarios:
Following the retest, the pair is now trading persistently below 1.36303; this is after a rebound below 1.37087 and continued decline until reaching around 1.35496 before rebounding and correcting, indicating that the selling momentum evident so far declares relative control of the supply side.
Some technical indicators also support this view. The price has so far stabilized below the moving averages (20 and 50), in addition to the relative strength index (RSI) curve stabilizing below the 50 level, indicating the same negative view and relative dominance of the supply side.
Based on this, here are the possible scenarios:
1. Negative Scenario:
Stabilizing below 1.36303 before falling and stabilizing below 1.35968 could indicate continued selling control in the short term and we may see a target lower to 1.35496, if it breaks and stabilizes below 1.35496 we may target 1.35034.
2. Scenario:
If it is unable to stay below 1.35496, we will see occasional fluctuations that are a sign of a temporary balance between the forces of supply and demand.
3. Positive Scenario:
A break above 1.36303 and then a continuation of the uptrend, a break and hold above 1.37087 could signal buying control and we could see further gains targeting higher levels around 1.37876.
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