USD/CAD Weekly Forecast: Weak economy weighs on CAD

• The Canadian dollar strengthened on higher oil prices.

• US consumer confidence rose and the economy expanded at a faster pace than expected.

• Canada’s economy showed no expansion, missing expectations for a 0.1% increase.

The USD/CAD weekly forecast is bullish amid the economic divergence between Canada and the US. The oil price correction could also weigh on the loonie.

USD/CAD Ups and Downs

The USD/CAD pair fell this week, but closed well above its lows. The decline came as the Canadian dollar strengthened on higher oil prices. Oil rose amid heightened tensions in the Middle East.

–Interested in learning more about day trading brokers? Check out our detailed guide –

However, economic data from the US and Canada supported an upward trend. In particular, US consumer confidence rose and the economy expanded at a faster rate than expected. At the same time, the core PCE price index held steady at 0.2%. These reports supported a strong dollar.

On the other hand, Canada’s economy showed no expansion, missing expectations for a 0.1% increase. Consequently, the Canadian dollar relaxed.

Next week’s key events for USD/CAD

Next week, the US will release data on manufacturing PMI and employment. Similarly, Canada will release its employment report. In addition, investors will be watching the Bank of Canada’s policy meeting on Wednesday.

Employment figures from both countries will shape the outlook for future policy decisions by the Fed and the BoC. Central banks are beginning to focus more on growth as inflation approaches targets. Therefore, policy makers are keen to see if demand in the labor sector is falling. In particular, the labor market drives a large part of most economies. Consequently, signs of weakness will put pressure on central banks to reduce borrowing costs.

Meanwhile, investors are expecting another rate cut at the BoC meeting.

USD/CAD Weekly Technical Forecast: Downtrend breaks with 1.3400 in sight

Technically, the USD/CAD price has continued its decline below the critical 1.3600 level, indicating a solid bearish trend. The price is trading well below the 22-SMA and the RSI is near the oversold region, showing that the bears are in the lead.

–Interested in learning more about automated trading? Check out our detailed guide –

However, the decline stopped before reaching the next support level at 1.3400. This it is a sign that the bears are exhausted after such a steep decline. Therefore, they need a short break before continuing further below. A pullback could review the 1.3600 or 22-SMA level. However, as the bearish trend is strong, the price could eventually decline to the 1.3400 support level.

Want to trade forex now? Invest at eToro!

67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.