The USD/CAD was closed at 1.36366 after placing a high of 1.36404 and a low of 1.35276. Overall the movement of USD/CAD remained bullish throughout the day. The USD/CAD pair posted small daily gains on Tuesday but extended them on Wednesday on the back of broad-based US dollar strength and weak crude oil prices.
Greenback found demand in the market after souring market sentiment raised due to the release of a report mentioning that the US was planning to impose new tariffs of more than $3billion worth UK & EU imports. The equities across the globe fell on Wednesday, including S&P 500 futures, which were down 0.92% on the day. But the US dollar Index rose 0.6% on the day towards 97.14, which gave strength to the US dollar and pushed the currency pair USD/CAD higher.
In the second half of the day, the Housing price index from the US for April showed a decline to 0.2% from the 0.3% expected and weighed on the US dollar; however it failed to reverse the USD/Cad pair movement.
Furthermore, The President of Chicago Fed, Charles Evans, said on Wednesday that the central bank had plans to avoid negative interest rate decisions as long as it could, and if Fed moved there, it would be a big surprise. He also said that there was more space for monetary stimulus and expected the economy to recover strongly in the second half of the year.
On WTI Crude oil front, the risk-off market sentiment weighed on Crude oil prices, which lost 0.65% and moved near #39.70 level. The decreased crude oil prices weighed on the commodity-linked currency the Loonie, which ultimately pushed the pair USD/CAD further high. Despite less production in the US, the crude oil's stockpiles increased to 1.4M against the expected 1.2M and indicated less demand for crude oil. This situation exerted pressure on crude oil and eventually weighed on commodity-linked Loonie also. Weaker Canadian dollar gave a push USD/CAD pair, and the pair rose above 1.36400 level on Wednesday.
Daily technical Levels
Support Resistance
1.3562 1.3679
1.3485 1.3719
1.3445 1.3796
Pivot Point: 1.3602
Technically, the USD/CAD seems to exhibit bullish bais, especially after violating the downward trendline resistance level of 1.3550. As we can see, the commodity currency has violated the descending triangle pattern, and with this, the odds of bullish trend continuation increases. On the higher side, we may see Canadian dollar soaring until the level of 1.3688, which also marks a double top level. Above 1.3688, the next resistance level can be found around 1.3795, while support holds around 1.3550. Before we enter a buy trade, we should wait for correction until the 1.3550 level. Good luck!