USD/CAD Forecast 19/12: Long-Term Bias Favors Upside (Chart)

(MENAFN- Daily Forex)

• USD/CAD pulled back after softer CPI data fueled rate-cut speculation, but the broader outlook still favors the US dollar.
• The pair remains range-bound and choppy, with traders watching key technical levels for directional clarity.
• The US dollar initially tried to rally against the Canadian dollar during the trading session on Thursday but has given back gains at the 1.38 level.

This is not a huge surprise considering that the CPI numbers came out lower than anticipated, so traders are starting to think that perhaps the Federal Reserve will have to be a little bit more aggressive with its interest rate cut cycle.

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That being said, this is a market that continues to see a lot of volatility, and the US dollar is still favored in the longer term. However, the market needs to get past the 1.3850 level in order to turn things around completely. In the meantime, the market may simply be trying to build up some type of floor, which makes a lot of sense Structure and Market Memory

The 1.3750 level has been both support and resistance previously, and therefore, it makes sense that market memory comes into the picture. All things being equal, if the market were to break down below that level, it's possible that we could go to the 1.36 level. However, this would likely be a move against the US dollar in broader terms, not just against the Canadian dollar.

EURUSD Chart by TradingView

From here, it is believed that it's probably only a matter of time before the market rises, but it's important to keep in mind that this pair can be very choppy. This is mainly due to the fact that there is so much cross-border control done out of necessity that it really is one of those forex pairs that, while it can be speculative, tends to be more or less industrial and commercial driven.

That means that range-bound trading is the norm, and that is how this pair is viewed. If we can rally from here, a move to the 1.40 level makes a certain amount of sense. Again, if we break down, then a move to the 1.36 level makes sense. Either way, this is a slow and steady type of market. Right now, it appears to be trying to pick a direction, although the eventual direction is believed to be higher.

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