USD/CAD: Upside capped around 50-day SMA as traders weigh WTI recovery
- USD pullback, WTI recovery favor sellers.
- Global trade pessimism questions the downside.
- Comments from the BOC policymakers and second-tier US data bear market attention.
Despite elevated tension between the US and China keeps spreading pessimism across the commodity-linked currencies, the USD/CAD pair chose to remain under 50-day SMA, near 1.3410, while heading into European open on Monday.
The reason could be a recent recovery in WTI on the back of likely increase in nuclear stocks by Iran and expected an extension of supply cuts by the OPEC+ alliance.
Crude is Canada’s largest export item and hence any price changes to the energy benchmark have a direct correlation with the Canadian Dollar (CAD).
Latest pullback of the US Dollar (USD), amid week-start profit-booking, can also be considered as a reason for the upside cap of the pair.
The US New York Empire State manufacturing index, NAHB housing market index and comments from the Bank of Canada’s (BOC) Deputy Governor Lawrence Schembri can direct near-term trade sentiment.
The forecast suggests no change in the US housing market gauge of 66 while indicating a bit softer figure of 12.75 versus 17.80 prior for manufacturing index. Further, BOC’s Schembri will be watched closely to seek any more clues of monetary policy easing.
Technical Analysis
In addition to 50-day simple moving average (SMA) level of 1.3415, multiple levels surrounding 1.3430 also caps immediate advances by the pair, a break of which can please buyers with 1.3460 and 1.3500.
On the flipside, 100-day SMA level of 1.3350 and 1.3310 may offer intermediate halts towards the downturn to 1.3280 including 200-day SMA.
Author
Anil Panchal
FXStreet
Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.
