Canadian Dollar ends recovery run as quickly as it began

• The Canadian Dollar backslid once again on Thursday.
• Canada lacks meaningful data releases this week.
• The BoC is broadly expected to ease rates further, limiting CAD strength.

The Canadian Dollar (CAD) snapped its recent recovery, falling back into the low end on Thursday, driven lower by an overall upbeat market tone toward the Greenback. Making matters worse, the Loonie is suffering from a lack of key support with the Bank of Canada (BoC) broadly expected to trim interest rates by a further 50 bps.

Daily digest market movers

• The CAD’s recovery rally snapped almost as soon as it started.
• The Loonie shed one-third of one percent against the Greenback after a meager recovery following a ten-day decline.
• US Retail Sales firmly beat expectations for September, bolstering the US Dollar heading into the tail end of the trading week.
• US Initial Jobless Claims also beat the street on Thursday, further propping up Greenback bidding flows.
• Most analysts expect the BoC to trim interest rates by another 50 bps on October 23 to try to bolster a swamped-out housing market being crushed by a national housing affordability crisis.

Canadian Dollar price forecast

The USD/CAD pair has shown a robust bullish movement recently, with the price breaking above the 50-day Exponential Moving Average (EMA), which is currently at 1.3631, and trading above the 200-day EMA at 1.3615. The pair has found short-term resistance near the 1.3800 psychological level, after testing highs around 1.3801. However, it has yet to confirm a breakout above this level. The sustained bullish momentum is also supported by the upward slope of the 50-day EMA, which is approaching a bullish crossover with the 200-day EMA, suggesting further upside potential if the price can clear the immediate resistance.

The Moving Average Convergence Divergence (MACD) indicator shows continued bullish momentum, with the MACD line trading above the signal line and remaining in positive territory. However, the histogram is beginning to flatten, indicating a potential slowdown in upward momentum in the short term. Should the pair fail to break above 1.3800 convincingly, we may see a pullback toward the 50-day EMA support around 1.3631. A sustained move above 1.3800 would open the door for further gains toward the next resistance levels at 1.3850 and 1.3900.

USD/CAD daily chart