USD/CAD: Lows in Sight as Bearish Sentiment Creates Momentum

The USD/CAD is trading within sight of lower depths seen early this week as behavioral sentiment seemingly remains optimistic that selling pressure can stay strong.

In the last week of March and first week of April the USD/CAD was trading above the 1.36000 price tag with a rather sustained effort.  On Monday of this week, the 8th of May, the USD/CAD hit a low of nearly 1.33175 and then traded slightly upwards with choppy movement hitting the 1.34100 mark yesterday. However, after financial institutions seemingly digested the U.S Consumer Price Index numbers yesterday, the USD/CAD has found a downward path again.

Support Levels in Sight as Speculators Likely Are Attracted to the Notion of Another Selling Mode

As of this writing the USD/CAD is trading near the 1.33775 mark and the 1.33800 ratio may play a semi-important brief technical consideration.  However, considering the ability of the USD/CAD to trade lower after the inflation data from the U.S largely met expectations, behavioral sentiment among financial institutions and traders seems to have turned optimistically bearish. Tomorrow the U.S will see Consumer Sentiment readings from the University of Michigan.

If tomorrow’s Consumer Sentiment results come in under expectations there is a reasonable suspicion to lean towards a selling mode with the USD/CAD that could build in strength.  This week’s low of nearly 1.33175 is close enough for traders to look at this level below as an ultimate target for selling momentum, but still far enough away to be able to target closer levels below as quick-hitting wagers if bearish sentiment continues to mount. The range of 1.33700 to 1.33500 can work possibly as a region for bearish traders to look for targets, provided they are not using excessive leverage which would make even these numbers too ambitious to aim for as take profit marks as of this writing.

Financial Institutions may think Yesterday’s Inflation Numbers can Pause the Federal Reserve

  • Yesterday’s CPI results nearly hit the exact targets regarding the broad reading and the core outcome. And the data may carry enough power to make the Federal Reserve consider pausing interest rate hikes in June.
  • The USD/CAD is relatively close to its one-month low of nearly 1.33010 to perhaps create the desire to look for more downside price action in the USD/CAD for traders with a long-term approach.

Traders who have the desire to chase lower values in the USD/CAD in the near term cannot be blamed, but tomorrow's U.S Consumer Sentiment readings will certainly factor into the results of the currency pair before going into the weekend. Commodity prices among Crude Oil and Gold have been relatively steady and healthy this past week too, which may give some additional impetus to the USD/CAD striking a bearish notion.

The trend lower in the USD/CAD the past week has been sustained and aiming for lower ratios seems a speculative trade that may create a positive result. Perhaps selling the USD/CAD after slight reversals higher for cautious traders will work well if they need to use tight risk management tactics.

Canadian Dollar Short-Term Outlook:

Current Resistance: 1.33825

Current Support: 1.33710

High Target: 1.34090

Low Target: 1.33110

USD/CAD

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Robert Petrucci
Robert Petrucci has worked in the Forex, commodity, and financial profession since 1993. Important aspects of his work involve risk analysis and advisory services. As an advisor in a Family Office he maintains a conservative approach for wealth management and investments. Robert also works in private finance with investors and companies delivering financial and management services.