Canadian Dollar (USD/CAD Price, News and Analysis:
- USD/CAD trend back in control with further declines likely.
- The US dollar is looking oversold in the short-term.
US Dollar Weakness a Constant Theme
The greenback continues to weaken and is close to giving back all of the near ten point rally seen in early-to-mid March. The spread of COVID-19 continues in the US, with just over 4 million confirmed cases recorded with around 145,000 fatalities. The US Congress is currently debating another stimulus package, mooted to be around USD1 trillion, to help kick-start the economy further although divisions remain between Republicans and Democrats over the make-up of this package.
The US dollar basket (DXY) is back below 95.00 and now eyes the 94.54 low made on March 9 this year. Below here there is swing-low at 94.49 made on January 10, 2019, before another swing-low at 94.28 made on October 16, 2018. The secondary sell-off in the USD from the end of June was given extra impetus by the formation of a 50-dma/200-dma crossover, a ‘death-cross’ signal. Since this occurrence, the greenback has printed a near-unbroken series of lower highs and lower lows with the sell-off gaining further traction this week. This acceleration has pushed the US dollar further into oversold territory and this reading may now act as a brake to further declines.
US Dollar Basket (DXY) Daily Price Chart (December 2019 – July 23, 2020)
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USD/CAD – Trendline Resistance Back in Play
Trendline resistance from the mid-March high is now back in play after a brief breakout last week. USD/CAD has sold off by around 250 pips this week after rejecting the 50-dma on Monday. On Tuesday the pair went back below trend and yesterday another ‘death-cross’ appeared on the daily chart, adding to negative sentiment. The June 10 multi-month low at 1.3316 remains at risk ahead of a cluster of lows around 1.3200 made in mid-late February this year. The CCI indicator shows the extreme oversold nature of the pair, and like the US dollar basket, this suggests that the ongoing trend lower may slow down to allow market conditions to re-balance.
USD/CAD Daily Price Chart (December 2019 – July 23, 2020)
| Change in | Longs | Shorts | OI |
| Daily | 8% | -8% | 2% |
| Weekly | 89% | -41% | 13% |
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