The US dollar is pushing higher against the Canadian dollar, following Federal Reserve Chair Jerome Powell’s testimony before US Congress where he paved the way for further aggressive rate action from the US central bank.
Oil latest weakness is also factor behind the recent decline in the Canadian dollar after weekly inventory data from the American Petroleum Institute showed an improvement in stockpiles.
As per the API Weekly Crude Oil report for the period ending on Jun 17, stockpiles rose 5.607 million barrels in the United States versus an increase of 0.736 million barrels the previous week.
Additionally, talks that the United States President Joe Biden will announce gas tax relief by the end of the week also weighed on the oil prices, which in turn also impacts the Canadian dollar currency.
Going into the rest of the week the focus is going to be on the United States PMI Manufacturing report and the 1.3000 level on the USDCAD pair. More weakness in oil could prompt a break above the 1.3000 area.
Relatively neutral levels of sentiment are still being seen towards the USDCAD pair, with some 53 percent of traders currently holding a positive view towards the USDCAD pair.
This neutral sentiment bias is not conclusive to further market breakout, but it is worry and it could mean that USDCAD bulls could be in for a tough week in breaking the 1.3000 resistance level.
USDCAD Short-Term Technical Analysis
The USDCAD pair has formed a notable inverted head and shoulders pattern, and the inverted head and shoulders pattern that has yet to ignited to the upside with a clean break of the 1.3050 level.
According to the size of this pattern it is implying that the USDCAD pair could actually rally by 500 points. However, the recent stall of the 1.3000 area has thrown shades of grey on this theory.
USDCAD Medium-Term Technical Analysis
The USDCAD pair is largely range bound over the medium-term, with the range to watch 1.3000 to 1.2000. This is the key price range to watch going forward as a clean break from 1.3000 and the USDCAD could be seriously bullish.
A large, inverted head and shoulders pattern has also formed, which continues to foreshadow more gains in the USDCAD pair. A break under 1.2300 would invalidate the pattern.