Canadian Dollar Fundamental Outlook: Neutral
- USD/CAD uncertain after two doji candles represent indecision
- Price action pauses at a critical juncture, Loonie remains bound by psychological resistance
- Canadian Dollar (Loonie) remains vulnerable to Fed speak and hawkish commentary this week from the Fed Chair, Jerome Powell.
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The Federal Reserve and the BoC (Bank of Canada) are on this week’s event risk as market await the BoC interest rate decision and Fed Chair Powell testimony. With interest rate forecast continuing to contribute to driving volatility, the BoC is expected the pause its on their policy rates while the Federal Reserve will likely increase rates by a further 25 basis points.
The Federal Reserve Rate Probability
Source: Refinitiv
Bank of Canada (BoC) Policy rates Distribution
With interest rate differentials widening between the two currencies, any changes to the narrative or the repricing of new information could influence price action.
Although the Fed has remained hawkish over recent weeks, the remainder of the economic docket poses an additional threat for volatility for USD/CAD.
DailyFX Economic Calendar
To learn more about how to trade USD/CAD , check out ourDailyFX Education section.
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USD/CAD Technical Analysis
On the daily chart below, USD/CAD is currently testing the 1.36 psychological handle, settling around this zone over the past two sessions. With the two doji candles suggestive of indecision, a break of this zone could drive prices in either direction.
For bullish continuation to be probable, the Canadian Dollar would need to breach 1.365 and retest 1.370. However, if prices falter and trade below Fibonacci support around 1.356, bears may have the opportunity to push prices toward prior support at 1.346.
USD/CAD Price Chart (Daily)
Chart prepared by Tammy Da Costa using TradingView
of clients are net long. of clients are net short.
| Change in | Longs | Shorts | OI |
| Daily | 5% | -22% | -5% |
| Weekly | 10% | -31% | -7% |
— Written by Tammy Da Costa, Analyst for DailyFX.com
Contact and follow Tammy on Twitter: @Tams707