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Canadian Dollar Outlook – USD/CAD Continues to Threaten Support as Oil Prices Jump

canadian-dollar-outlook-–-usd/cad-continues-to-threaten-support-as-oil-prices-jump

Canadian Dollar Price (USD/CAD), News, and Analysis:

  • Oil prices threaten multi-year highs.
  • USD/CAD eyeing a break below 1.2000.

The Canadian dollar remains strong against the US dollar and continues to press down on psychological support at 1.2000, a level that the pair has been unable to break conclusively in the past weeks. The dominant themes of a weaker US dollar and a Canadian dollar boosted by the ongoing oil rally and a hawkish Bank of Canada remain in place, leaving support for the pair under increasing pressure.

Gold Prices Rise to a 4-Month High, Crude Oil Surges Before OPEC+ Meeting

USD/CAD is stuck in a 1.2010/1.2200 trading zone with the lower bound increasing tested. It may be that the Bank of Canada is drawing a line in the sand at 1.2000, to relieve pressure on Canadian exporters, after the 18% fall in the pair from the March 2020 high. The pair did try and move higher last Wednesday, hitting a high around 1.2135 but this move was retraced the next day. USD/CAD opened today below the 20-day simple moving average, a negative sign, while the growing gap between the 20-dsma and the 50-dsma highlights the weak sentiment in the market at the moment. Volatility has fallen to multi-month lows due to the pair’s tight trading conditions, while the market has just dipped into oversold territory for the first time since mid-May.

USD/CAD Daily Price Chart (December 2020 – June 1, 2021)

IG Retail trader data show 80.68% of traders are net-long with the ratio of traders long to short at 4.18 to 1.We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests USD/CAD prices may continue to fall.Positioning is less net-long than yesterday but more net-long from last week. The combination of current sentiment and recent changes gives us a further mixed USD/CAD trading bias.

What is your view on USD/CAD – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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