Today in the European trading session, the USD/CAD currency pair stopped its previous session losses and took some modest bids around above the 1.3150 level despite the broad-based U.S. dollar weakness, The losses in the U.S. dollar could be associated with the on-going cautious market sentiment ahead of Jackson Hole conferences. This is because the investors are looking towards the Federal Reserve Chairman Jerome Powell for guidance on how the central bank might alter its policy framework to help the U.S. recovery.
As of now, the U.S. dollar recovered some of its sharp losses as the U.S. Treasury yields erased losses after the overnight slump. Moreover, the modest recovery in the U.S. dollar can be attributed to upbeat U.S. Durable Goods data. On the contrary, the sharp upticks in the crude oil prices failed to underpin the commodity-linked currency, the loonie, which also benefitted the pair. At the moment, the USD/CAD currency pair is currently trading at 1.3154 and consolidating in the range between 1.3133 - 1.3167.
The intensifying tensions between the U.S. and China back into the play, as both parties fired each other. It is worth mentioning that the Trump administration slapped sanctions on Chinese 24 companies who were helping China to mark its existence in the South China Sea. At the same time, China fired missiles in a military drill near the South China Sea.
Despite this, the broad-based U.S. dollar failed to put any safe-haven bid on the day as traders looking to Federal Reserve Chairman Jerome Powell for direction as to how the central bank might alter its policy structure the U.S. recovery. The Fed chief is expected to talk over the central bank's framework review; a study started nearly two years ago to explore how monetary policy should be adapted for a low-interest-rate environment. He is registered to begin his speech at 9:10 AM ET (1310 GMT). On the other hand, the upbeat U.S. Durable Goods data helped the U.S. dollar limit its deeper losses, providing further support to the pair.
At the crude oil front, the WTI crude oil prices reporting gains on the day. However, the reason for the gains in crude oil could be attributed to the reports that Hurricane Laura's warning is raised to Category 4 while expecting that the storm could exceed Hurricane Katrina that occurred in 2015. However, the rise in oil prices failed to underpinned demand for the commodity-linked currency the loonie and remained supportive for the currency pair.
Looking ahead, the market traders will keep their eyes on the Federal Reserve Chairman Jerome Powell's speech in the Jackson Hole Symposium. As well as, America's preliminary readings of the second quarter (Q2) GDP, which is expected -32.5% versus -32.9% will be key to watch.
Daily Support and Resistance
S1 1.3049
S2 1.3121
S3 1.3147
Pivot Point 1.3193
R1 1.3219
R2 1.3265
R3 1.3337
The USD/CAD is gaining support over the triple bottom support level of 1.3139 level, closing candles over this level, supporting bullish bias. But the recent candles are exhibiting neutral bias among investors. It means they are neither bullish nor bearish, and it seems like they are waiting for a reason to trigger further price action in the market. On the lower side, a bearish breakout of 1.3139 level can drive the selling trend until 1.3106 level. Simultaneously, the bullish trend continuation can lead to USD/CAD prices towards 1.3194 and 1.3236 level. Let's wait for the Fed Chair Powell's speech before placing any bets in the USD/CAD pair. Good luck!