At the start of the week, the Canadian Dollar looked ready to strengthen vs. the US Dollar, but as the week has progressed, that has started to look less likely. The sharp drop in crude oil prices is also not helped the situation.
USDCAD has been building a base around the 1.31 level, and earlier this week the price was still trading below July 4 low of 1.3037 and looked ready to drift towards the October 16 low of 1.2919.
However, the price is now firmly back oscillating, and the new range is the 1.3017 to 1.3146 interval.
Given that the long-term trend is bullish since the start of 2018, a break to the July 1 high of 1.3146 could mark a multi-week low that could send the price towards the June 21 high of 1.3231, followed by the psychological level of 1.33. This scenario is also looking more likely given that US data has been holding up well lately, and crude oil prices have taken a step back following de-escalation in the middle east.
The alternative scenario is a break to this week’s low of 1.3017, on this happening the price might drift towards the October 16 low of 1.2919. Time will tell which direction the price will break, but I would prefer some news or macroeconomics development to trade a potential breakdown of 1.2916.