The Canadian dollar continued to benefit from higher oil prices paired with the rise in market sentiment however, as we head into the Easter holiday, the drop in liquidity is likely to hold the USD/CAD within a tight range over the next few hours of trading, and the loonie may face increased selling pressures over the following week as the economic docket is expected to reinforce a weakening outlook for growth and inflation.
Currency Pair: USD/CAD
Chart: 60 Min Charts
Short-Term Bias: Flat
Analysis
The Canadian dollar continued to benefit from higher oil prices paired with the rise in market sentiment however, as we head into the Easter holiday, the drop in liquidity is likely to hold the USD/CAD within a tight range over the next few hours of trading, and the loonie may face increased selling pressures over the following week as the economic docket is expected to reinforce a weakening outlook for growth and inflation. After slipping to a low of 1.1463 in November, the USD/CAD surged to a high of 1.3065 in March as investors lowered their appetite for high-yielding assets, and the rise in market sentiment may continue to weigh on the pair but nevertheless, as investors raise bets for another rate cut by the BoC in an effort to soften the landing of the economy, fundamental headwinds are likely to weigh on the exchange rate as the region faces a deepening recession. As a result, I expect the USD/CAD to bounce back over the following week to fill-in the gap from the 120 SMA, and we may see the pair attempt to push back above 1.2450-60 (38.2% Fib) to make a run for 1.2720-30 (21.4% Fib) over the near-term. Be sure to check out other Technical Reports from DailyFX for additional information on the major currency pairs.
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