- Optimism surrounding energy prices, the US-China trade talks drive sellers to USD/CAD.
- The overall weakness of the US Dollar (USD) also supports the downside momentum.
Despite oversold RSI conditions, the USD/CAD pair refrains from taking a U-turn from multi-month low as it takes the rounds to 1.3094 during early Friday.
Canada’s main export item crude remains strong at five-week highs as not only weak US oil inventory data but brighter chances of an extension to the major oil producers’ output cut accord and geopolitical tension between the US and Iran pleases energy bulls.
Adding to the Canadian Dollar’s (CAD) strength could be market expectations of a positive outcome from the US President Donald Trump and his Chinese counterpart Xi Jinping’s Saturday night dinner discussions.
The US Dollar’s (USD) decline on the back of bearish central bank comments, sluggish data at home also favor the pair sellers.
Traders may now look for monthly gross domestic product (GDP) data from Canada, coupled with G20/political headlines, for fresh impulse. Canadian GDP is likely to have softened to 0.1% from 0.5% during April.
Technical Analysis
June 20 low of 1.3151 and June 10 bottom around 1.3242 are likely immediate upside resistances for the pair whereas November 2018 bottom surrounding 1.3050 and 1.3000 round-figure seem close supports to watch. It should also be noted that the 14-day relative strength index (RSI) is in the oversold territory and can trigger the pair’s pullback
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