FX.co ★ Forecast for USD/CAD, December 16

USD/CAD PRICE FORECAST:

• USD/CAD slipped to a fresh yearly low on Tuesday
• With jawboning from BOC Governor Macklem and an upcoming FOMC rate decision, USD/CAD could undergo significant volatility
• The pair was pressured by USD weakness amid renewed hopes for a US fiscal stimulus agreement.

USD/CAD broke lower Tuesday, falling to levels not seen since April 2018. Recent losses have seen the pair extend its sharp decline since late November and its broader weakening since March. The widespread USD weakness and modest strength of the Canadian Dollar have combined to create a longer-term downtrend for the pair that now threatens to extend into the New Year.

USD/CAD's 4 hourly MACD has diverged in favor of the bulls. MACD histograms has produced higher lows , contradicting lower lows on the price chart. That bullish divergence indicates a potential for a corrective bounce.

Nearby areas of resistance in the event of a pullback may reside just south of the 1.2800 level and subsequently along the declining trendline drawn off the September and November lows. Fresh lows signal persistent weakness. A shorter-term pullback might lead to the bearish sentiment on the pair.