USD/CAD Price Forecast: Loonie on Offer Despite Stronger Crude Oil Prices

Crude oil markets resisting dollar upside.US debt ceiling debate continues.Key are of confluence in question.

CANADIAN DOLLAR FUNDAMENTAL BACKDROP

The Canadian dollar is trading in line with the markets response to US debt ceiling negotiations which has seen an uptick in USD support. Crude oil has also rallied and somewhat capped upside for USD/CAD bulls ahead of the US trading session. Following an announcement from OPEC+ addressing short sellers ahead of the June 4th meeting, has driven prices higher. Iraq’s oil minister stated that they are committed to OPEC+ cuts giving more sustenance to the crude oil move.

Upcoming US PMI data may provide some short-term volatility for the pair but if estimates are anything to go by, CAD my regain some ground on the greenback.

USD/CAD ECONOMIC CALENDAR

Source: DailyFX Economic Calendar

TECHNICAL ANALYSIS

USD/CAD DAILY CHART

Chart prepared by Warren Venketas, IG

Daily USD/CAD price action is now testing the upside of the medium-term symmetrical triangle (black) coinciding with the 50-day MA (yellow). The recent break above the 1.3500 psychological handle has not managed to spur bullish optimism towards triangle resistance just yet. The current daily candle is forming a long upper wick and if we see a daily close in this fashion, we may see some downside to come from a technical point of view.

Key resistance levels:

1.3600Triangle resistance50-day MA (yellow)

Key support levels:

1.3500200-day MA (blue)

IGCS shows retail traders are currently SHORT on USD/CAD , with 52% of traders currently holding short positions (as of this writing). At DailyFX we typically take a contrarian view to crowd sentiment resulting in a short-term downside bias.

Contact and followWarrenon Twitter:@WVenketas