USD/CAD is flat on the day and in the consolidation of the prior daily bearish impulse after a being outcome from the Federal reserve that weighed on the greenback in what was giving back territory gained earlier in the week. Investors weighed the Federal Reserve's move to taper its bond-buying program, with CAD recovering from an earlier three-week low which it hit as oil prices tumbled.

There was a limited reaction across the G10FX space following the Fed meeting after it said it will begin trimming its monthly bond purchases in November with plans to end them in 2022, but held to its belief that high inflation would prove "transitory" and likely not require a fast rise in interest rates. Higher oil prices benefit the resource-linked Canadian dollar, as black gold is Canada’s top export product.

Despite the pullback in the pair, the bulls remain hopeful amid a broad-based recovery in the US dollar. The greenback has reversed more than half of the Fed-led decline, now trading at 94.10, up 0.25% on the day.

BULLISH AND BEARISH CONDITIONS/ POSSIBILITIES : (TECHNICALS)

US Dollar versus Canadian Dollar took a reversal from the 23.6% fibo retracement level on the daily chart, sustaining itself above the 1.2280 and 1.2300 price action. The aforementioned price actions act as strong support zone - side by side to the 23.6% fibo level, bears falling short on momentum to drive pair lower was overridden by the bulls. The hawkish momentum saw Dollar pulling a leg up - indicating signs of rallying towards 38.2% fibo retracement level at 1.2443. If this happens, the market will open doors towards further gains by driving USDCAD at 50% fibo retracement level near 1.2570. On the bearish side, USDCAD needs to break below the 23.6% fibo zone with an impulsive behavior, until then we are bullish on the pair. 

King Dollar in the mood to override Loonie

Nov 04 2021