Canadian Dollar falls further as Canadian Trade Balance contracts

• The Canadian Dollar lost another quarter percent on Tuesday.
• Canada saw a steeper-than-expected contraction in trade balance figures.
• Fed Meeting Minutes to reveal further details about Fed's latest rate moves.

The Canadian Dollar (CAD) shed another quarter of a percent against the Greenback on Tuesday, trimming lower slipping back against the US Dollar for a fifth straight trading day. The CAD has shed almost 2% against the Greenback since peaking in late September.

Canada's trade balance contracted more than expected in August, with Exports falling and Imports clocking in only a minor upswing. US trade balance figures moderated, and Fedspeak continues to dominate market flows as investors look for signs of more rate cuts.

Daily digest market movers

• The CAD shed weight on Tuesday, contracting another 0.25% against the Greenback.
• Canadian International Merchandise Trade in August fell $1.1 billion, much steeper than the forecast $-500 million.
• The decline in Canadian Merchandise Trade was sparked by a deeper cut to Exports, which fell from $65.66 billion to $64.31 billion compared to a softer rise in Imports, to $65.41 billion from $64.97 billion.
• Fed's latest Meeting Minutes set to release on Wednesday as Fedspeak continues to chill rate cut hopes.
• Read more:
  Fed's Collins: US economy, labor market remain strong
  Fed's Bostic: Jobs market is not weak, economy might be too strong for policy recalibration

Canadian Dollar price forecast

The USD/CAD daily chart shows a clear upward momentum that has developed in recent trading sessions. The price has moved above both the 50-day Exponential Moving Average (EMA) at 1.35880 and the 200-day EMA at 1.36048, which often signals a potential trend shift or the continuation of a bullish trend. Breaking these key moving averages is a significant technical indicator suggesting that bullish sentiment is building in the market. The price is now hovering around 1.36515, a level that could act as a short-term resistance point.

The MACD (Moving Average Convergence Divergence) at the bottom of the chart is currently displaying a bullish crossover. The MACD line (blue) has crossed above the signal line (orange), which is a positive sign for further upward momentum. Additionally, the histogram bars have shifted into positive territory, confirming that bullish pressure is increasing. This could indicate that the market is gaining momentum and further upside is possible if these signals remain intact.

However, caution should be exercised as the price is approaching potential resistance areas just above the current levels, which could prompt some profit-taking. If the price fails to break decisively above the recent high, it may consolidate around the EMAs or retrace back to test support levels at the 1.35880 or 1.36048 areas. Overall, the technical outlook for USD/CAD is currently bullish, but traders should watch for signs of exhaustion or a breakout above current resistance for confirmation of further gains.

USD/CAD daily chart