The current depreciation in USD/CAD seems to have stalled before the January 2018 non (1.2247) since it defends the April low (1.2266), but looming improvements from the Relative Strength Indicator (RSI) could indicate a further decrease in the foreign exchange rate when the oscillator breaks under 30 and pushes right into oversold territory.
USD/CAD trades within a narrow range since it fails to expand the set of highs and lows after the Federal Reserve interest rate decision, along with the exchange rate could continue to merge in front of their vital data prints on tap for later this week since Fed officials hit a dovish forward advice for fiscal policy.
The job reports coming from the US and Canada may influence the near-term prognosis for USD/CAD since the world's biggest market is expected to include 978K projects in April, while its Canadian counterpart is expected to drop 175K jobs during precisely the exact same period.
It was seen when the upgraded NFP report will help determine the monetary policy standpoint as Fed officials have been supposed to upgrade the overview of Economic Projections (SEP) in the upcoming quarterly meeting in June, but it appears like that the Federal Open Market Committee (FOMC) is in no hurry to scale back its emergency steps as New York Fed President John Williams, a permanent voting-member on the FOMC, warns that"the information and terms we're seeing today aren't nearly sufficient for the FOMC to change its own fiscal policy stance."
Subsequently, the diverging avenues for fiscal policy may maintain USD/CAD under stress since the Bank of Canada (BoC) tapers its quantitative easing (QE) program, along with the crowding behaviour performed from last year seems poised to last as retail dealers have been net-long USD/CAD as May 2020.
The IG Client Sentiment report indicates a whopping 82.29% of dealers are net-long USD/CAD, together with the proportion of traders extended to brief standing at 4.65 to 1.
The amount of dealers net-long is 1.93percent lower compared to yesterday and 20.80% higher from a week, even while the amount of dealers net-short is 4.04percent lower compared to yesterday and 15.43% reduced from last week. The development in net-long standing has spurred a much larger tilt in retail opinion as 78.84percent of dealers were net-long USD/CAD a week, although the decrease in net-short standing comes as the foreign exchange rate fails to expand the bearish price series after the Fed rate decision.
That said, USD/CAD may point additional efforts to check that the January 2018 non (1.2247) since the lean in retail opinion continues, and looming improvements from the Relative Strength Indicator (RSI) might indicate a further decline in the market rate when the oscillator breaks under 30 and pushes right into oversold territory.