Canadian Dollar: USD/CAD Price- Consolidation Continues Ahead of BoC Meeting
USD/CAD Technical Outlook
- The greenback selloff slows down over the sharp increase of Covid-19 cases
- Bullish signals on USD vs CAD price chart
USD/CAD Price – Reversed Higher
On Thursday, USD/CAD declined to an over two-week low at 1.3491. However, the price rallied after and closed the weekly candlestick on Friday in the green with a 0.3% gain. Alongside that, the Relative Strength Index (RSI) rose from 42 to 48 and reflected a weaker bearish momentum.
Safe havens rallied over fears that the coronavirus resurgence in the US may cause new restrictions and slow down the economic recovery. Investors await for Bank of Canada meeting tomorrow, yet the worst of the Covid-19-induced GDP contraction might be over therefore, the bank may keep its policy unchanged.
USD/CAD DAILY PRICE CHART ( Aug 2, 2018 – July 14, 2020) Zoomed Out
USD/CAD DAILY PRICE CHART (April 22 – JuLY 14, 2020) Zoomed In
In Mid-June, USD/CAD corrected its downside move and started a sideways move. Since then, the price has failed on multiple occasions to move to the lower trading zone and highlighted weaker bears at that point. On Thursday, the market reversed higher and eyed the high end of the current trading zone 1.3511- 1.3793.
A close above the high end of the zone signals that bulls may push USDCAD towards 1.4000 and a further close above that level could encourage them to extend the rally towards 1.4320.
On the other hand, a close below the low end of the zone signals that USDCAD could fall towards 1.3291, and any further close below that level may embolden bears to press the market even lower towards 1.3015.
USD/CAD four hour PRICE CHART (May 29 – JuLY 14, 2020)
By the end of June, USD/CAD traded below the uptrend line originated from the June 10 low at 1.3315 and indicated bear’s attempt to control the price action.
Today, the pair has broken above the downtrend line originated from the June 26 high at 1.3715, and generated a bullish signal. With that said, any break below the uptrend line originated from the June 9 low at 1.3491 could reverse lower the market direction.
To conclude, a break above 1.3654 may trigger a rally towards 1.3787, while a break below 1.3480 could send USDCAD towards 1.3401. Nonetheless, the weekly support and resistance levels underscored 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.