The USD/CAD pair has been struggling at the edge of the 1.3200-50 price area after having an impulsive bearish momentum since the price rejected off the 1.3600 area with a daily close. USD expected the interest rate decision of FED which demotivated the USD bulls while CAD gained the momentum.
Recently, the US Central Bank Federal Reserves policymakers have showed patience and caution on interest rate rise to avoid the slowdown. The US economy has been performing quite well for the last few months resulting in the four-time Fed's interest rate hikes last year which were protested by many policymakers and US President Donald Trump. USD has been recently struggling with the worse economic reports including PPI which decreased to -0.2% from the previous value of 0.1% which was expected to be at -0.1% and Empire State Manufacturing Index which decreased significantly to 3.9 from the previous figure of 10.9 which was expected to increase to 11.9. As for the reports, half of the regional banks opposed the interest rate hike in December as it increases the borrowing costs which is expected to lead to an increase in business operational costs as well as affecting the inflation of the economy. The Fed seemed to be very comfortable with the interest rate hike, but the consequences for the future growth, as stated by policymakers, can be devastating for the economy. Though the Fed decided to slow down the pace of interest rate increase in 2019, but there is still a chance of the interest rate hikes at least 2 times this year. Today, US Import Prices report is going to be published which is expected to increase to -1.3% from the previous value of -1.6%, and NAHB Housing Market Index is anticipated to be unchanged at 56. Ahead of G20 meetings this week, USD is currently not quite dominating over CAD as before.
As for CAD, having Overnight Rate unchanged at 1.75% without meeting the expectation of certain policy makers of an increase to 2.00%, CAD managed to sustain the gains it had over USD in the process. The US and Canada are going through the negotiations on the Trade War that is expected to take positive turn in the G20 Meetings to be held this week. As Canada is the second largest supplier of both aluminum and steel to the United States, tariffs on such items can impact the economic development. This week, on Friday, in Canada, CPI report is going to be published which is expected to be unchanged at -0.4% which still maintains the indecisive sentiment in the market for upcoming CAD gains against USD.
As of the current scenario, USD is currently quite stable with the grounds, despite the recent worse economic results, but if there are any positive CAD reports published in the coming days, this may lead to the continuation of the bearish momentum in future. To sum up, USD is expected to struggle further while CAD continues the downward pressure in the pair.
Now let us consider the situation form the technical point of view. The price is currently pushing higher after certain correction at the edge of the 1.3200 area. The price is expected to reach the 1.3350 area before pushing lower with confluence towards the 1.2850 support area in the coming days. As the price remains below the 1.3500 area with a daily close, the bearish bias is expected to continue.
SUPPORT: 1.2850, 1.3000
RESISTANCE: 1.3350, 1.3500
The material has been provided by InstaForex Company - www.instaforex.com