Canadian Dollar: USD/CAD Price – Downside Momentum at a Crossroad
USD/CAD Technical Outlook
- A weaker risk-on sentiment slows down USD/CAD selloff
- USD vs CAD price chart exposes bear’s indecision
USD/CAD Price - Recovered Losses
On Wednesday, USD/CAD declined to an over three-month low at 1.3315 however, the price rallied then closed on Friday the weekly candlestick in the green with a 1.2% gain.
The prospect of a possible second coronavirus wave, weighed on the economic recovery expectations therefore, investors slowed down the safe haven selloff. Concerns may continue in the markets as long as we do not have a vaccine for the Coronavirus.
USD/CAD DAILY PRICE CHART (June 28, 2018 – June 16, 2020) Zoomed Out
USD/CAD DAILY PRICE CHART (April 16 – June 16, 2020) Zoomed In
In late May, USD/CAD failed on multiple occasions to rally to the higher trading zone highlighting bull’s weakness. Last week, bears pressed the market to a multi-month low however, the pair climbed on Thursday to the current trading zone 1.3511 – 1.3793 reflecting bear’s hesitation at this stage.
A close below the low end of the aforementioned trading zone signals that bears could reattempt testing 1.3291. Any successful close below that level may send USDCAD even lower towards 1.3015.
On the flip-side, another close above the low end of the zone reflects a weaker bearish sentiment and may cause a rally towards the high end of the zone. Any further close above that level may extend the rally towards 1.4000.
USD/CAD four hour PRICE CHART (May 22 – June 16, 2020)
On June 11, USD/CAD rallied above the lower line on the downtrend lines fan originated from the May 22 high at 1.4048 and generated a bullish signal. Today, the price has rebounded from the low end of the current trading zone discussed above on the daily chart. Hence, any violation of the higher line of the aforementioned downtrend lines fan would be considered as an additional bullish signal.
A break above 1.3686 may trigger a rally towards 1.3786 on the other hand, any break below 1.3493 could send USDCAD towards 1.3387. Nonetheless, the daily and support and resistance marked on the four-hour chart should be watched closely.
Written By: Mahmoud Alkudsi, Market Analyst
Please feel free to contact me on Twitter: @Malkudsi
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.