Our USDCAD forecast comes on the back of a strong sell-off in the last hours yesterday (Monday 5 July) and the pair is now located at 1.2351 above today’s low at 1.2306. The pair failed to stabilize above the weekly pivot point (1.2354) signalling strong pressure.
The Canadian Dollar has taken the lead as the DXY is under massive pressure after the US Unemployment Rate has increased unexpectedly from 5.8% to 5.9% in June. The USD buyers were disappointed as the specialists had expected a potential drop to 5.6%.
USDCAD forecast – Bust-up at OPEC+
But also in the picture today is the impact of the oil price on CAD, with the bust-up at the OPEC+ meeting sending crude higher and adding to volatility in USDCAD. No agreement has been reached on increasing crude production, which means the current limits should – theoretically – still apply.
Personally, I believe that USD/CAD could develop a new upward movement if the FOMC Meeting Minutes report turns out to be more hawkish. In the short term, USD/CAD could resume its drop. The retreat could help us to catch new upside movements, although it may be limited by oil prices heading further north.
USD/CAD will be influenced by the US and Canadian high-impact economic data during the week. Canada is to release its Employment Change and the Unemployment Rate on Friday. Today, the US ISM Services PMI could shake the pair.
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USD/CAD forecast technical analysis – pressure at 50% retracement level
In today’s USDCAD forecast technical analysis we note that the pair has rebounded a little but it has failed to stabilize above the weekly pivot point signalling a potential downside movement towards the descending pitchfork’s median line (ml).
Currently the price is pressuring the 50% retracement level, closing and staying under this level could really indicate more declines. Technically, only an upside breakout above the descending pitchfork’s upper median line (uml) could really announce an upside continuation.
The S1 (1.2258) and the median line (ml) are seen as major downside targets. We’ll see what will really happen in the short term. USD/CAD could move sideways and it could develop a triangle pattern.
The decline yesterday has helped the pair to catch a new leg higher. The US Dollar Index is also expected to increase this week after its temporary decline.
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