CANADIAN DOLLAR FORECAST: USD/CAD PRICE EDGES LOWER AFTER REJECTION AT RESISTANCE, CRUDE OIL REBOUNDS
- Spot USD/CAD price action comes under pressure after failing to top a major technical resistance level
- The Canadian Dollar selloff stabilizes as negative crude oil prices turn positive
- USD/CAD could snap back higher if coronavirus-battered economic data on deck for release recharges US Dollar demand
USD/CAD comes under fire as the Canadian Dollar rebounds with crude oil prices. Spot USD/CAD price action has drifted lower by more than 100-pips since Monday’s swing high and coincides with a rejection near the 1.4200 handle.
| Change in | Longs | Shorts | OI |
| Daily | -32% | -11% | -21% |
| Weekly | -22% | -3% | -12% |
USD/CAD has notched a series of lower highs since the March 18 peak, but the major currency pair also seems to have formed a short-term trendline of support connecting the April 13 and April 20 lows. As such, spot USD/CAD looks relatively confined between the 23.6% Fibonacci retracement level and mid-point of its recent bearish leg.
USD/CAD PRICE CHART: 4-HOUR TIME FRAME (16 MARCH 2020 TO 22 APRIL 2020)
Perhaps high-impact economic data on deck for release later this week, like jobless claims and flash PMIs from IHS Markit due Thursday, might catalyze the next big move in USD/CAD. On that note, spot USD/CAD price action has potential to spike back toward month-to-date highs if another wave of risk aversion pushes traders into safe-haven currencies and boosts US Dollar demand.
Conversely, market participants may remain forward looking and continue the influx of coronavirus optimism as COVID-19 lockdowns come to an end and guidelines are outlined for restarting economic activity. This could facilitate a protracted drift lower in USD/CAD as the Canadian Dollar recovers with crude oil prices and general risk appetite.
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-- Written by Rich Dvorak, Analyst for DailyFX.com
Connect with @RichDvorakFX on Twitter for real-time market insight
