There are several fundamental reasons why the USD/CAD currency pair may rise, and a channel breakout could further confirm this potential upward trend.
Firstly, the monetary policy divergence between the United States and Canada could play a significant role in boosting the value of the USD relative to the CAD. The US Federal Reserve has been more hawkish than the Bank of Canada in recent years, raising interest rates and signaling its intention to begin tapering its asset purchase program. This could increase demand for USD, as investors seek higher yields.
Additionally, commodity prices, particularly oil, which is Canada's primary export, may impact the CAD. If oil prices fall, it could weaken the CAD and increase demand for the USD. Conversely, if oil prices rise, it could strengthen the CAD and potentially weaken the USD.
In terms of a channel breakout, if the USD/CAD pair were to break above a significant resistance level, it could signal a shift in market sentiment toward a bullish trend. Traders may interpret this as a signal to buy USD/CAD, which could further drive up the value of the pair.
Overall, the combination of fundamental factors such as monetary policy divergence and commodity prices, along with a potential channel breakout, could contribute to a rise in the USD/CAD currency pair. However, it's important to note that the foreign exchange market is highly unpredictable, and there are always risks involved when trading currencies.
Firstly, the monetary policy divergence between the United States and Canada could play a significant role in boosting the value of the USD relative to the CAD. The US Federal Reserve has been more hawkish than the Bank of Canada in recent years, raising interest rates and signaling its intention to begin tapering its asset purchase program. This could increase demand for USD, as investors seek higher yields.
Additionally, commodity prices, particularly oil, which is Canada's primary export, may impact the CAD. If oil prices fall, it could weaken the CAD and increase demand for the USD. Conversely, if oil prices rise, it could strengthen the CAD and potentially weaken the USD.
In terms of a channel breakout, if the USD/CAD pair were to break above a significant resistance level, it could signal a shift in market sentiment toward a bullish trend. Traders may interpret this as a signal to buy USD/CAD, which could further drive up the value of the pair.
Overall, the combination of fundamental factors such as monetary policy divergence and commodity prices, along with a potential channel breakout, could contribute to a rise in the USD/CAD currency pair. However, it's important to note that the foreign exchange market is highly unpredictable, and there are always risks involved when trading currencies.