Canadian Dollar Trades Lower

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Canadian Dollar Trades Lower

Canadian Dollar (Cad) Trades Near 1.34 As Crude Prices Fall

The crude price downtrend has also weakened the Canadian Dollar (CAD) against the greenback. Since the Loonie is closely linked to commodities like crude oil, it is only natural for CAD to get under pressure.

The USD/CAD printed back & and forth price action during the trading day, but the overall trend was CAD negative.

While the CAD is showing weakness, the US Dollar is also not that strong, as a decline was noticed in the bond yields. Since the bond yields show negative pressure ahead of the CPI, the investors are preparing to adjust for a new reality where interest rates can remain high!

Five Rate Cuts Expected In 2024

Throughout the year 2024, a total of five rate cuts will be done by the Federal Reserve. However, no rate cut is expected at January's meeting, but March's meeting is a different story.

According to Scotiabank, the USD/CAD weekly chart suggests that a hammer candlestick parent has formed, which is considered bullish. Simply put, the Canadian Dollar could weaken over the long run!

Additionally, the USD managed to close the last week positively. This was interesting, considering the pair went through many swings on the intraday chart.

That also adds credibility to the bullish candlestick pattern and highlights that the USD will likely remain positive in the next few weeks.

The expected price range for the USD/CAD in the short term is from 1.34 to 1.35, and the current price is already near 1.34.

successful break of 1.35 could open the doors to the following resistance levels for the USD/CAD traders. However, the key risk event ahead is the CPI, which could force the USD/CAD to switch directions. In that case, we must account for low crude prices and a weaker US Dollar.

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