Canadian Dollar Forecast: Key USD/CAD Levels to Watch
CAD Analysis and Talking Points
- Canadian Dollar Remains Weak Amid Falling Oil Prices
- USD/CAD Capped by Key Resistance
- Canadian Dollar at Risk from Bulls Bailing
USD/CAD | Canadian Dollar Remains Soft
As risk sentiment remains dented by the continuing concerns surrounding the coronavirus outbreak, high beta currencies such as the Canadian Dollar, remains on the backfoot. Alongside this, the sizeable decline observed in energy markets, in particular, crude oil prices (Brent down 18% since Jan 7th peak), has been a drag on the commodity linked currency. That said, amid the recent dovish pivot from the Bank of Canada following soft domestic data, CAD is likely to become more volatile in response to incoming economic data. With that in mind, given the speculative long positioning in the Canadian Dollar, risks are asymmetrically tilted to the downside.
Canadian Dollar at Risk from Long Liquidation
Source: CFTC, DailyFX
On the technical front however, the 200DMA has capped the recent upside in USD/CAD at 1.3226 and thus failure to break could pave the way for a pullback in the pair. Momentum indicators continue to signal further upside in the pair and thus we see risk of a break above the 200DMA in the absence of a stabilisation in oil prices and risk sentiment, which in turn opens the door towards 1.3250 with 1.3300 the key upside target.
USD/CAD Price Chart: Daily Time Frame
Source: IG Charts
--- Written by Justin McQueen, Market Analyst
Follow Justin on Twitter @JMcQueenFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.