Photo by Michelle Spollen on Unsplash

The Canadian Dollar (CAD) pared further gains on Monday, marking the start of the new trading week with a renewed decline against the US Dollar (USD). The Loonie is down nearly 1.25% against the Greenback from last week’s peak, bolstering the USD/CAD pair back above 1.3700 and taking a fresh run at key technical averages.

The Bank of Canada (BoC) is slated to deliver its latest interest rate decision in the middle of the week. However, the United States (US) Federal Reserve (Fed) is also due with its own rate call, looming large over the BoC and the dueling interest rate statements are poised to throw the Canadian Dollar for a volatile loop.

Daily digest market movers: Interest rates, trade deals, and Russia sanctions weigh on FX markets

• The Canadian Dollar shed further weight, falling against a fast-rising US Dollar and sending the USD/CAD paid back into recent highs above 1.3700.
• US President Donald Trump is struggling to secure a desirable trade deal with the Canadian government. Canadian Prime Minister Mark Carney remains adamant that he has no interest in letting Donald Trump undercut his own USMCA deal that already balances trade between Canada and the US.
• The BoC is set for another rate call this week, alongside the US Fed. Both central banks are expected to keep interest rates on hold, however policymaker statements have taken on newfound importance.
• President Trump is also weighing cutting down the time before new Russian sanctions on specific products take effect as the Trump administration struggles to get Russia to do what it wants in Ukraine.
• Crude Oil markets saw an uptick in volatility after Trump publicly mused about cutting Russia’s deadline to solve the Ukraine war down to less than two weeks from Monday. Donald Trump is holding potential energy market sanctions on Russia if Russian President Vladmir Putin doesn’t do more to support Trump’s long-claimed status as a critical global dealmaker.

Canadian Dollar price forecast

Monday’s one-sided price action behind the Canadian Dollar and the US Dollar sent USD/CAD back above the 1.3700 handle. The pair is now taking a fresh run at the 50-day Exponential Moving Average (EMA) near 1.3740.

Even if bulls are able to muscle USD/CAD into fresh multi-month highs above 1.3800, the 200-day EMA lies in wait near 1.3900, potentially capping long-term gains if the Greenback reverses its recent trend and begins to climb again.

USD/CAD daily chart

(Click on image to enlarge)

More By This Author:

Dow Jones Industrial Average Goes Both Ways Ahead Of Hectic Week
Dow Jones Industrial Average Recovers On Friday After Better-Than-Expected Durable Goods Orders
GBP/USD Heads Into Friday On The Backfoot After PMI Data Miss