Is the Canadian dollar getting ahead of itself today?
The loonie continues to sit in a bit of a range against the dollar over the last two months between 1.2900 and 1.3200 for the most part. Overnight gains in USD/CAD failed short at sustaining a break above the 100-day MA (red line) and that sees price slip a little thereafter.
The near-term chart continues to show that bias remains in favour of USD/CAD buyers as price stays above the two key hourly moving averages. But upside is now capped by the 100-day MA @ 1.3055. Even if Canada misses out on the deadline here, there is still reason to believe that eventually some form of deal will be struck.
And that hope will still keep USD/CAD in-check within the range of 1.2900 to 1.3200 as highlighted above. From here, I see the real risk for a large extended move in the pair to only come if there isn’t a trade deal between the US and Canada.
The closer we are to that outcome, the more pressure that will weigh on the loonie and we’re potentially looking at USD/CAD moving towards the year’s highs and beyond at that point. On the flip side, in an event of a deal, I would say that’s a fairly optimistic outcome for Canada and the loonie but the gains may not stretch out too much as that remains the much-expected outcome still at this point in time.