USD/CAD is currently trading at the edge of 1.3350. The price is expected to climb higher in the coming days. Despite the ongoing government shutdown in the US and downbeat economic reports, USD has asserted strength over CAD recently. The pair is expected to lead to retain bullish momentum in the coming days.
US economic growth is set to be affected by the longest government shutdown. Its negative impact will follow. The probability of recession in the US in the next 12 months is assessed at 20% like last month. The chance of recession in next two years is around 40%. According to Michael Morgan, the overheated economy in the US and unstable inflation rates alongside monetary policy tightening may undermine momentum in not-too-distant future. Recently US Existing Home Sales report was published with a decrease to 4.99M from the previous figure of 5.33M which was expected to be at 5.27M and HPI remained unchanged at 0.4% which was expected to decrease to 0.3%.
On the other hand, recently Canada's Retail Sales report revealed a slump to -0.9% from the previous value of 0.2% which is worse than the pessimistic forecast for a -0.6% decrease. Core Retail Sales dropped to -0.6% from the previous value of -0.2% which was expected to be at -0.4%. Recently Bank of Canada Governor Stephen Poloz stated that Canada's economy is on a sound footing. However, lower oil prices which might hinder economic growth this year but not stop it. The Bank of Canada has recently downgraded the growth forecast of the domestic economy to 1.7% from the previous value of 2.1% which frustrated the market sentiment on CAD.
Meanwhile, both USD and CAD are struggling for gains amid the recently published economic reports. USD is more advantageous in light of slightly better economic data, while Canada cut its economic growth. As a result, investors favor USD as a safe haven asset. Nevertheless, both currencies are still quite vulnerable.
Now let us look at the technical view. The price is currently moving higher above 1.3350 area while also breaking above the dynamic level of 20 EMA. The MACD moving averages are also intersecting each other with a bullish indication which also supports the upcoming bullish momentum in the pair. As the price remains above 1.2850 area with a daily close, the bullish bias is expected to continue with a target towards 1.3500-1.3650 area in the coming days.
SUPPORT: 1.2850, 1.30, 1.3200
RESISTANCE: 1.3500, 1.3650
BIAS: BULLISH
MOMENTUM: VOLATILE
