The USD/CAD currency pair has continued to find haven demand for the third successive day, showing positive bias on Monday. Even with the recent jump, the two are still mired in their range. This tighter range has set the stage for its recent daily movements over the past week. Market participants constantly pour over leading economic indicators and outside factors as well. They pay special attention to the volatility of crude oil prices, as these have led to high Canadian dollar volatility.
As pessimism has crept in across the FX board over the past few days, USD/CAD has been quite resilient, trading with a bid tone. Analysts warn that the duo may be vulnerable to further losses if it sieves through the important 1.3700 barrier. The continued market pressures and recent movements of the Canadian dollar indicate a further fall. It shouldn’t particularly, given that the currency goes by one of its nicknames—the Loonie—which itself is a nod to Currency of Canada’s close association with the national bird.
USD/CAD attempting to break out, but struggling at major resistance around the 100-day SMA USD/CAD Daily Chart. Currently, that floor is around 1.3825. Traders are watching this important resistance level closely as a break above it should lead to more bullish momentum and continuation. Should USD/CAD fail to penetrate this ceiling, it may cap upside potential. This would probably ensure that the pair remains range-bound, as it has been for most of this year.
Beyond the Fed, recent economic data has been extremely important in moving markets and keeping investors’ spirits buoyed. A shocking Canadian monthly employment report print last Friday has sent the Loonie into a spin. This announcement raises USD/CAD substantially. It maintains the currency peg strong even in face of otherwise very bad economic news from Canada. Traders consider each of these points carefully. They expect that on any future USD/CAD advance, the largest resistance would be seen around last week’s swing high which is located in the 1.3800-1.3810 area.
Watch this market closely Should buyers continue forcing USD/CAD higher, a test above the 1.3900 mark could be in play. Such a turn of events would tilt market fundamentals squarely against bearish traders. If we cannot build upon this momentum, these numbers may get worse. Analysts have been talking about downside Jean to the 1.3600s. This would place USD/CAD within striking distance of its year-to-date low of around 1.3540, hit back in June.
Ultimately, as it stands, traders are on the look out for headline risk that could impact the USD/CAD pair’s performance. For one, crude oil prices are a key concern here, due to their close tie with the Canadian economy. Just as quickly, any large swing in oil prices can affect the value of the Loonie dollar right away. Consequently, these will independently put appreciationary pressure on the USD/CAD exchange rate.