USD/CAD Price: Waiting on OPEC+ for Further Guidance
Canadian Dollar Price, News, and Analysis:
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USD/CAD continues its longer-term downtrend with the Loonie one of only a handful of currencies able to better a resurgent US dollar. The year-long sell-off from the mid1.40s is starting to slow down with the pair now in the middle of a four-month range between 1.2360 and 1.2950 and it will require a strong driver to break out of this zone in the short- to medium-term.
This week’s OPEC+ meeting is expected to see current output levels left untouched due to the ongoing spread of covid-19 and the knock-on effect on the global economy. On Thursday, OPEC+ revised down oil demand estimates from 5.9 million bpd to 5.6 million bpd, noting ‘a rising number of confirmed Covid-19 infections globally’ with lockdown measures increased and reimposed ’in many regions’. OPEC will look to further run down oil supplies before the next meeting in May, giving the cartel time to see the effectiveness of the new pandemic measures. This should anchor the price of oil for the next month, bolstering the Canadian dollar.
In the short-term, USD/CAD will be looking to break out of a 20- and 50-day sma pincer movement with the pair stuck between the two for the last week. The 20-dsma is currently acting as support around 1.2534 while the 50-dsma is at 1.2621, leaving the pair stuck in a narrow range. The downtrend currently remains in place with a number of lower highs on the chart since early 2020, while a break below 1.2365 is needed to make a new lower low to confirm ongoing weakness.
USD/CAD Daily Price Chart
IG Retail trader data show 56.48% of traders are net-long with the ratio of traders long to short at 1.30 to 1. We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests USD/CAD prices may continue to fall.Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current USD/CAD price trend may soon reverse higher despite the fact traders remain net-long.
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