USD/CAD Continues Positive Momentum Amid Bullish USD
- USD/CAD gains positive traction for the sixth straight day amid a bullish USD.
- The overnight slump in Oil prices undermines the Loonie and remains supportive.
- Acceptance above the 200-day SMA favors bulls ahead of the FOMC minutes.
As the USD/CAD pair maintains its positive momentum for the sixth consecutive day, trading around the 1.3665 area during the early European session, investors are closely monitoring key factors driving this movement.
Factors Contributing to USD/CAD Strength
- Geopolitical Risk Premium: A possible ceasefire between Lebanon’s Hezbollah and Israel has led to an overnight slump in Crude Oil prices, undermining the Loonie and supporting the USD/CAD pair.
- Expectations for Larger Rate Cut: Anticipation of a larger interest rate cut by the Bank of Canada (BoC) further weakens the Loonie, favoring USD strength.
- Resilient US Labor Market: Signs of a still resilient US labor market and expectations for another oversized rate cut in November have led investors to pare bets for a more aggressive policy easing by the Federal Reserve (Fed).
- Technical Buying: The sustained breakout above the 200-day Simple Moving Average (SMA) near the 1.3600 mark has attracted technical buyers, supporting the upward trajectory of the USD/CAD pair.
Upcoming Events Impacting USD/CAD
Investors are eagerly awaiting several key events that could influence the future direction of the USD/CAD pair:
- FOMC Meeting Minutes: The release of the Federal Open Market Committee (FOMC) meeting minutes later during the North American session will provide insights into the Fed’s rate-cut path.
- US Economic Data: The upcoming release of the US Consumer Price Index (CPI) and the US Producer Price Index (PPI) will also be closely watched for cues on the Fed’s monetary policy decisions.
- Canadian Employment Report: The Canadian monthly employment report on Friday will play a crucial role in determining the next directional move for the USD/CAD pair.
Technical Outlook for USD/CAD
From a technical perspective, the USD/CAD pair appears poised to continue its upward trajectory, supported by the following observations:
- Positive Oscillators: Oscillators on the daily chart show positive traction without entering the overbought territory, indicating further upside potential.
- Key Levels to Watch: The 1.3700 mark and the 1.3725-1.3730 supply zone are key resistance levels to monitor for potential price targets.
On the downside, the 1.3625-1.3620 horizontal zone serves as immediate support, followed by the 200-day SMA at 1.3600. Any pullback could be seen as a buying opportunity, with major support near the 1.3545-1.3540 region.
Conclusion
The USD/CAD pair’s recent bullish momentum is driven by a combination of fundamental factors and technical indicators. While upcoming economic events and data releases may introduce volatility, the overall outlook remains positive for the USD/CAD pair. Investors should closely monitor key levels and market developments to make informed trading decisions.