- The doubts over the US-China trade deal please the bulls while the US-Iran plays offer intermediate recovery.
- Canada’s housing data and EIA’s inventory report can offer near-term direction.
The USD/CAD pair trades near 1.3460 while heading into the European open on Wednesday. The quote seems to justify latest pullback of WTI while traders await April month housing starts from Canada.
Likely failure of the US and Chinese lawmakers to agree on the trade deal has been weighing on the commodity-linked currencies, including the Canadian Dollar (CAD).
Crude, Canada’s main export item, recently witness recovery after private report of the US crude oil stock conveyed lesser than prior 6.810 million barrels’ inventory of 2.806 million barrels.
Adding to the energy benchmark’s strength could be escalating tensions between the US and Iran. The US has recently sent its cargo of armies to Iran spotting expected revolt by the nation in response to the Trump administration’s sanctions.
Looking forward, Canada’s housing market data may propel further recoveries if matching 196.4K forecast compared to 192.5K prior. Also, the official US crude stock data from the Energy Information Administration (EIA) will also be up for the week ended on May 03. The inventory level last rose to 9.934 million barrels.
Technical Analysis
Two-week long descending trend-line limits the pair’s immediate upside at 1.3490, a break of which can challenge April month highs near 1.3520 and also to the broader ascending trend-line stretched since January 07 at 1.3540.
Alternatively, short-term upward sloping trend-line at 1.3430 and 50-day simple moving average (SMA) level of 1.3380 can confine bears targeting 100-day SMA level of 1.3345.
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