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Canadian Dollar: USD/CAD price- Lack of Clear Direction

Canadian Dollar: USD/CAD price- Lack of Clear Direction

Mahmoud Alkudsi, Analyst
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USD/CAD Technical Outlook

  • Markets adjust between recovery hopes and fears of Covid-19 second wave
  • USD vs CAD continues its sideways move, what’s next?

USD/CAD Price – Bulls Pullback

On June 26, USD/CAD rallied to a near four-week high at 1.3715. However, the price declined and closed on Friday its weekly candlestick in the red with a 1.0% loss.

The sharp increase of the coronavirus cases in some U.S. states triggered concerns about the economic recovery and increased demand on safe havens currencies yet, last week’s positive data revived risk-on sentiment.

USD/CAD DAILY PRICE CHART ( Aug 2, 2018 – July 7, 2020) Zoomed Out

usdcad daily price chart 07-07-20 Zoomed out
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USD/CAD DAILY PRICE CHART (April 22 – JuLY 7, 2020) Zoomed In

usdcad daily price chart 07-07-20 Zoomed in

In Mid-June, USD/CAD started a sideways move creating a higher low with a lower high. Later on, the price failed twice to decline to the lower trading zone and stuck in the current zone 1.3511 – 1.3793.

Yesterday, the price rebounded before testing the low end of the aforementioned zone and signaled the bear’s hesitation at this point. Hence, the market could point towards the high end of the zone. A further close above this level may encourage bulls to extend the rally towards the 1.4000 handle.

On the other hand, a close below the low end of the zone could send USDCAD towards 1.3291. A further close below that level may embolden bears to press even lower towards 1.3015.

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USD/CAD four hour PRICE CHART (May 29 – JuLY 7, 2020)

usdcad four hour price chart 07-07-20

By the end of June/early July, USD/CAD broke below two uptrend lines on the uptrend lines fan originated from the June 10 low at 1.3315 and remained trading below these two lines. Hence, any violation of the third line on the same fan would be considered a bearish signal while any break above the downtrend line originated from the June 26 high at 1.3715 would be considered a bullish signal.

To conclude, a break below 1.3480 could send USDCAD towards 1.3401 while a break above 1.3638 may trigger a rally towards 1.3787. That said, the weekly support and resistance levels underlined on the four-hour chart should be monitored.

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.