USD/CAD is currently consolidating around the lowest levels since 2017. Bulls are looking for an upside correction on a monthly basis as accumulation kicks in. Funds travelled between a high of 1.2078 and 1.2029 on the day with some upside pressure, rising 0.12% at the time of writing. The loonie edged lower against its broadly weaker greenback on Tuesday. The US dollar has edged lower on Tuesday to print 89.5350 for a fresh 4-1/2 month lows against a basket of peers in the DXY as officials from the US Federal Reserve reiterated that policy would stay pat calmed fears about inflation forcing rates higher. Earlier this week, we heard from both Fed Board Governor Lael Brainard and James Bullard, president of the St. Louis Federal Reserve. Brainard assuaged inflation concerns, saying she expects that price spikes associated with supply bottlenecks and the reopening of the economy to “subside over time.” Bullard said that while still in the pandemic, it was not the time to talk more about changing the parameters of monetary policy. The tones were backed by today’s comments from Fed’s Richard Clarida who said the threats to financial stability are manageable and that data continue to support inflation forecasts that are well anchored. Meanwhile, however, the Canadian dollar was pressured by domestic data that has otherwise enjoyed consistent better than expected data of late. On Tuesday, the numbers showed a likely drop for manufacturing sales in April. Canadian factory sales likely fell 1.1% in April from March, giving back some of the previous month’s increase, a flash estimate from Statistics Canada showed. The decrease was mostly attributed to lower sales in the transportation equipment industry. Canadian government bond yields were lower across a flatter curve as well. The 10-year marked its lowest since May 10 at 1.505% before edging up to 1.508%, down 3.5 basis points on the day. Taking a deeper look at the outlook Winding the charts back, the loonie has climbed 5.7% since the start of the year, the biggest gain among G10 currencies. The currency has been bolstered by higher commodity prices and a hawkish shift last month from the Bank of Canada. The monthly and weekly charts are compelling and are due for a correction, (more on this below). Fundamentally, however, strategists at Scotiabank, including Shaun Osborne, said “there appears to be little concern at the central bank about the CAD and the message is clear that the central bank will keep policy settings aligned with the economy as it works towards its goals.” “We continue to target a deeper push below 1.20 in the coming months,” the strategists said. Moreover, speculators have raised their bullish bets on the Canadian dollar to the highest since November 2019, data from the US Commodity Futures Trading Commission (CFTC) showed on Friday as the market prices in a reasonably hawkish road map for the BoC. All eyes on the oil price This week will be very quiet otherwise on the data front and there are no BoC speakers scheduled which leaves the loonie more vulnerable to potential unwelcome swings in commodity prices. While there is the case for a technical upside correction, the linchpin for the loonie could be in the price of oil in particular. The price of oil, one of Canada’s major exports, has been supported by tempered expectations of an early return of oil exporter Iran to international crude markets as well as prospects of unprecedented demand from the global economic recovery during these forthcoming summer vacation and travelling months. Concerns that Iran was soon going to start selling oil if an agreement resulted in the lifting of UN and other sanctions on crude exports had pulled down prices earlier but talks have not been conclusive. Indirect negotiations between the United States and Iran are due to resume in Vienna this week. Talks were given another life after Tehran and the UN nuclear agency extended a monitoring agreement on the Middle Eastern country’s atomic programme. However, the apparent differences suggest an end to sanctions is still some way off,” analysts at ANZ Bank said. ”With economic growth continuing to recover, and the market approaching the seasonal peak in demand, it will be in a much stronger position to handle any additional oil.” USD/CAD technical analysis The price would be expected to correct following such a fast move to the downside within three months of consecutive lower lows. Accumilation is kicking in. A 38.2% Fibonacci retracement aligns perfectly with the prior lows of 2018 as a meanwhile upside target. From a weekly impulse perspective, there is a confluence of the 50% mean reversion and 38.2% Fibonacci on the monthly impulse reinforcing the monthly resistance target: From a daily perspective, bulls will want to see the near term resistances broken for a high probability run between there and re monthly/weekly resistance target area: FX Street FX Street FXStreet is the leading independent portal dedicated to the Foreign Exchange (Forex) market. It was launched in 2000 and the portal has always been proud of their unyielding commitment to provide objective and unbiased information, to enable their users to take better and more confident decisions. View All Post By FX Street FXStreet News share Read Next Fed’s Daly: Sees no sign that long-term prices are rising in a way that’s continuous FX Street 2 years USD/CAD is currently consolidating around the lowest levels since 2017. Bulls are looking for an upside correction on a monthly basis as accumulation kicks in. Funds travelled between a high of 1.2078 and 1.2029 on the day with some upside pressure, rising 0.12% at the time of writing. The loonie edged lower against its broadly weaker greenback on Tuesday. The US dollar has edged lower on Tuesday to print 89.5350 for a fresh 4-1/2 month lows against a basket of peers in the DXY as officials from the US Federal Reserve reiterated that policy would stay pat… Regulated Forex Brokers All Brokers Sponsored Brokers Broker Benefits Min Deposit Score Visit Broker 1 $100T&Cs Apply 0% Commission and No stamp DutyRegulated by US,UK & International StockCopy Successfull Traders 9.8 Visit Site FreeBets Reviews$100Your capital is at risk.2 T&Cs Apply 9.8 Visit Site FreeBets Reviews$100Your capital is at risk.3 Recommended Broker $100T&Cs Apply No deposit or withdrawal feesTrade major forex pairs such as EUR/USD with leverage up to 30:1 and tight spreads of 0.9 pips Low $100 minimum deposit to open a trading account 9 Visit Site FreeBets ReviewsYour capital is at risk.4 T&Cs Apply Visit Site FreeBets ReviewsYour capital is at risk.5 Recommended Broker $0T&Cs Apply Trade gold, silver, and platinum directly against major currenciesUp to 1:500 leverage for forex trading24/5 customer service by phone and email 9 Visit Site FreeBets ReviewsYour capital is at risk.