Loonie Slips On BoC Rate Cut Expectation

Fundamental Analysis

* Loonie Swoon: The Canadian Loonie have broadly fell, further erasing recent gains against the US Dollar. Canada is not releasing any economic data on Tuesday, leaving the Canadian Dollar influenced by general market sentiment. Mixed economic data from the US, coupled with a prolonged decline in Crude Oil prices, has pushed investors towards safe havens, reducing the short-term appeal of the CAD. On U.S data front, the US Factory Orders in April rose 0.7% MoM, better than the forecast of 0.6%. Additionally, the Bank of Canada (BoC) is widely anticipated to announce a quarter-point interest rate cut on Wednesday, nearly a year after raising rates to a 23-year high of 5.0% last July.

Technical Analysis

* Technical Breakout: USDCAD was traded higher following prior breakout above the previous resistance level 1.36650. MACD which illustrate bullish momentum signal with the formation of golden cross suggest the pair to further extend its gains.

* Resistance and Support: If the bullish momentum persists, there’s a strong likelihood that the price will potentially head towards 1.37250. Conversely, a potential retracement is also to be expected and the price could head back towards 1.36150 should the price breach back above the 1.36650 level.

Understand how technical analysis can help you in this trading opportunity.

Potential Risks

Moving forward, investors will closely monitor upcoming data such as US JOLTS Job Openings, ADP Employment Change figures, and Non-Farm Payrolls (NFP) later this week to seek further cues for market direction.

Know how to manage trading risks with risk management strategies.

Monitoring

Stay updated on US and Canada data, central bank updates and any shifts in the US Dollar’s strength by following PU Prime’s market insights and daily financial news.

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Disclaimer: Trading derivatives involves high risks, and market conditions can change rapidly. The content is for informational purposes only and should not be considered as financial advice. Traders should conduct their own research and consider risk management strategies.