The Canadian dollar is trading sideways in Tuesday trade. Currently, USD/CAD is trading at 1.3232, down 0.04% on the day. On the fundamentals front, there are no major events, so I expect a quiet North American session for the pair. On Wednesday, the U.S. releases consumer inflation data and the Federal Reserve will set the benchmark rate.
OPEC Agrees to Cut Production
Canada is a major oil producer, so the Canadian dollar is sensitive to movement in oil prices. Crude prices jumped close to 7 percent last week, as investors reacted positively to an announcement by OPEC that members had reached an agreement to lower production, starting in January. The reduction in output is aimed at curbing the worldwide glut of crude and stabilizing oil prices. At the same time, some OPEC members are notorious for failing to adhere to their production quotas, and if the new agreement is not honored, oil prices could head lower.
Next – Federal Reserve Rate Decision
The Federal Reserve will be in focus on Wednesday, when the central bank sets the benchmark rate for the next month. The Fed is almost certain to maintain current rate levels. Fed policymakers have signaled a pause in rate cuts, after trimming rates on three occasions this year. This means that the upcoming rate statement could be a market-mover; a hawkish message from the Fed could boost investor risk appetite and push the Canadian currency higher.
I continue to monitor the 200-EMA and 50-EMA lines, as a crossover appears imminent. The 50-EMA is situated at 1.3234 and the 200-EMA is at 1.3239. If the 50-EMA crosses above the 200-EMA, it would be a bullish sign for USD/CAD (“golden cross”). There is support just below, at 1.3230. Close by is a support level at the round number of 1.3200. On the upside, we find resistance at the 1.33 level.
EUR/GBP is steady in the Tuesday session. Currently, the pair is trading at 0.8413, down 0.04% on the day. EUR/GBP remains at lows not seen since May 2017, as a stronger British pound is putting pressure on the pair.
EUR/GBP continues to put pressure on support at 0.8400. This major level has held since May 2017, so a breakout below this line would be a major development. Below, there is support at 0.8350. On the upside, there is resistance at the round number of 0.8500.
This article was originally posted on FX Empire
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