Will USD/CAD Continue To Consolidate Within Ascending Channel?

Zi Cheng

Summary:

Wednesday may witness the potential for the USD/CAD to weaken amid the backdrop of stronger crude prices.

BUY USDCAD

EXP

EXPIRED

1.36659

Entry Price

1.38959

1.35673

1.42251 +0.00156 +0.11%

Pips

EXPIRED

1.35673

1.35186

Exit Price

1.36659

Entry Price

1.38959

Fundamental Analysis

For the second consecutive session, the USD/CAD pair has shown a downward trend, with a slight decrease to approximately 1.3560 during the Asian trading session on Wednesday. This decline is partly attributed to the strength of crude oil prices, which bolster the Canadian Dollar (CAD) and consequently weaken the USD/CAD pair.

The price of Western Texas Intermediate (WTI) crude oil is hovering around $84.80, near its highest level since October 2023. This increase in WTI price is supported by a combination of factors including a weakening US Dollar and concerns regarding supply due to geopolitical uncertainties.

Furthermore, the downward pressure on the USD/CAD pair is exacerbated by the weaker US Dollar Index (DXY). DXY is facing challenges following dovish comments from Federal Reserve (Fed) officials. Cleveland Fed President Loretta Mester has expressed expectations of rate cuts later this year, while San Francisco Fed President Mary Daly considers three rate cuts in 2024 "reasonable," pending further evidence.

In economic news, US February JOLTS Job Openings surpassed market expectations by rising to 8.756 million from the previous figure of 8.748 million. Additionally, Factory Orders increased by 1.4% month-on-month in February, rebounding from a 3.8% decline in the prior reading.

Looking ahead, market participants are expected to closely monitor Canadian Import and Export data on Thursday, along with labor data scheduled for release on Friday. In the US, attention will focus on the ADP Employment Change and ISM Services PMI data on Wednesday. Furthermore, Federal Reserve Chairman Jerome Powell is scheduled to deliver a speech on the US economic outlook at the Stanford Business, Government, and Society Forum in Stanford.

Technical Analysis

USD/CAD has been moving steadily within the ascending channel and formed a resistance priced at around 1.36000 which is also a psychological resistance. I have a slight bias for USD/CAD heading towards the upside so I will be placing a buy stop order for a long position.

Will USD/CAD Continue To Consolidate Within Ascending Channel?_1

BUY STOP USD/CAD

ENTRY PRICE : 1.36659

STOP LOSS : 1.35673

TAKE PROFIT : 1.38959

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