The Loonie trades sideways after a sour day for the FX markets

Daily Currency Update

CAD - Canadian DollarThe Loonie trades sideways after weakening in yesterday’s trading session. The Loonie followed the ongoing trade dispute between the US and China, which was the most significant factor behind the drop of the Loonie. For obvious reasons, now the biggest concern for market participants is that not reaching an agreement between the US and China could endanger the chances of the USMCA as it awaits approval. Tomorrow though, the USD/CAD should have more influence from economic fundamentals when the consumer price index is released at 8:30 EST, the expected number is 2 percent. Technically speaking, the USD/CAD pair continues to trade in a range, testing a significant area of resistance between 1.3475 and 1.3515. This area has been tested since April 24th. The most interesting issue is that the US dollar index failed to make higher highs (which has downside pressure on the USD/CAD), but, at the same time, crude oil is weakening plus there is a “risk off” environment in the global fx market (which has upside pressure on the USD/CAD). It will be essential to see how the USD/CAD pair trades closer to the lower bound as well. The current support that was tested only twice in the last weeks was around 1.3375. Once the USD/CAD pair goes outside the range of 1.3375 and 1.3515, it might pick a direction.