Canadian Dollar Outlook: Key USD/CAD, CAD/JPY Levels to Watch
Canadian Dollar Tracking Risk Sentiment and Oil Prices
The Bank of Canada Business Outlook Survey continued to show a recovery in business sentiment from the near-record lows with optimism largely stemming from advances in vaccine developments. However, this is in contrast to the deterioration in the labour market, as evidenced by Friday’s jobs report. That said, in the short-run, the Canadian Dollar will continue to track risk sentiment and oil prices, which have broken out to fresh multi-month highs.
USD/CAD | Possible Base Forming as US Dollar Recovers
In recent sessions, the US Dollar has traded in corrective fashion as US yields make a topside breakout. USD/CAD looks to have formed a short-term base with the RSI failing to confirm the recent lower low in the spot price, thus, the pair is testing trendline resistance at 1.2750. That said, it is worth noting that in light of the recent bid in USD/CAD the RSI has yet to break over 50, while has a close above trendline resistance has also not materialised as of yet. This emphasises that the USD led bid in the pair remains corrective thus far. That said, if indeed there is a break, near term focus will be on 1.2835 and 1.2900 above.
Canadian Dollar Chart: Daily Time Frame
Canadian Dollar Technical Levels
Jan 11th High
Jan 6th low
CAD/JPY | Facing Long-Term Resistance
The cross is back to testing longer-term resistance situated at 82.00, however, with upside momentum stalling, further gains may be harder to come by in the short-run, particularly as good news is largely priced in risk assets, therefore rising concerns over the spike in virus cases presents downside risks. Support resides at 81.00 whereby a downside break may exacerbate further losses in the cross towards 80.50-60, below here places focus on 80.00-80.10 area.
CAD/JPY Chart: Daily Time Frame
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