USD/CAD: Enduring Upside Foreseeable

WikiFX News (1 Oct.) - With the Canadian dollar hampered by oil prices, USD/CAD may embrace further upside in the foreseeable future amid the unstable rally in the US dollar.

USD/CAD has been in a volatile downtrend since hitting the historic high of 1.46680 (recorded on January 20, 2016) on March 19. The pair is temporarily stabilizing above the downtrend line made on March 19 after turning up from the near-half-year low of 1.29945 on September 1.

In terms of the US dollar, it rebounded quickly after the dollar index bottomed at 91.782 on September 1 and even hit a new high of 93.582 (recorded on August 12) on September 9 before establishing a firmer footing in the volatile zone of 93.000-93.300. With bulls getting crowded, the dollar will see further recovery in the wake of the FED rate decision in mid-September.

In terms of the Canadian dollar, its price has been suffering a loss on the weak demand as the dollar index has bounced back and is finding some stability. Such a trend may be sustained in the future, which will lead to a deepened loss in CAD. These trends and news are expected to send upside potential to USD/CAD.

Considering the dollar index has been recovering since mid-September and oil prices have declined further, USD/CAD is expected to see a rally enduring for a long time.

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Candlestick Chart of USD/CAD, from January to Mid-September 2020