- USD/CAD outlook stays steady above 1.4000 level amid dollar’s safe-haven demand.
- Relieved fears of trade war provide mild support to the greenback.
- Subdued oil prices weigh on the CAD, keeping the USD/CAD supported.
The USD/CAD outlook remains steady as the greenback remains firm against the Canadian dollar in the last few sessions. The pair has gained around 0.3% over the past three trading days, reaching the 6-month highs. The bullish bias primarily stems from global uncertainty, supporting dollar while the Canadian dollar struggles for momentum. Geopolitical risks and trade tension have lent support to the safe-haven dollar.
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Investors remain keenly focused on global trade concerns. The ongoing US-China tariff dispute with a proposed 100% levy on Chinese goods set to take effect from November 1, has added more to the cautious market sentiment. The Federal Reserve has also noted that trade situation poses a threat to global growth and investor confidence. As a result, the Dollar Index has gained in the recent sessions. According to MarketWatch analysts, “The dollar remains supported by its relative yield advantage and safe-haven flows.”
Meanwhile, the Federal Reserve and Bank of Canada are preparing for the next policy meeting on 29th October. There’s nothing significant expected from both banks as the markets have already priced in the due changes. However, the existing rate differential favors the US dollar.
The USD/CAD remains comfortably above the 1.4000 mark, shedding the Asian session losses despite the US government shutdown and data blackout. Renewed optimism surrounding US-China trade talks gives some room to the dollar buyers.
From Canada, the weaker oil prices remain a key concern. The WTI prices fell to $57 after IEA’s projection of rising OPEC+ output, leading to a market surplus. This weighed on the Canadian dollar’s recovery, keeping USD/CAD supported in the near term.
Market participants are now eyeing the key inflation data from both the US and Canada along with BoC’s business outlook survey for fresh insights.
USD/CAD Technical Outlook: Neutral Near 20-MA
The USD/CAD price found decent support from the 5-period MA at 1.4015, looking to test the 20-period MA at 1.4040. Any move beyond the 20-MA could aim for 1.4060-80 supply zone. The RSI has recovered from the dip, now standing above 50.0 level, shows a room for further upside.
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On the flip side, 1.4000 remains a tough support. However, breaking below the level could ignite the bears to test 100-MA at 1.3970 ahead of a demand zone near 1.3920.
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