USD/CAD Worth Forecast:
- USD/CAD moved off latest lows, pushing past 1.2800 for the primary time in two weeks
- Progress above the extent was quick lived and USD/CAD has since pulled again and nears assist
- Whereas latest beneficial properties would possibly encourage USD bulls, the technical outlook reveals the trail of least resistance stays decrease
Canadian Greenback Forecast: USD/CAD Recovers, Will it Reverse Decrease Quickly?
USD/CAD began the week off sturdy because it pushed above 1.2800 for the primary time since late December. The broader Greenback Basket (DXY) additionally confirmed indicators of life because it pulled away from latest lows and retook the 90 mark. Bullish progress has already encountered resistance, nonetheless, and additional beneficial properties could turn out to be tougher to determine in consequence.
Canadian Greenback (USD/CAD) Worth Chart: Each day Time Body (July 2018 – January 2021)
Little has modified within the basic panorama and what has may very well work to erode USD/CAD additional. First, President elect Joe Biden introduced additional stimulus within the type of a number of trillions. Such a transfer would work to undermine the Dollar and threaten any tried restoration rallies.
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Alternatively, crude oil costs have continued to rise with the commodity reaching an 11-month excessive as of Tuesday’s session. As an essential issue of the Canadian economic system and Canadian Greenback, continued energy in crude oil may go to buoy the Loonie. Whereas modest crude energy is unlikely to singlehandedly drive USD/CAD decrease as soon as extra, it might work at the side of subsequent stimulus, each of which can see a renewed decline within the pair.
USD/CAD Worth Chart: 4 – Hour Time Body (July 2020 – January 2021)
Early areas of resistance within the occasion of a renewed restoration try doubtless reside simply south of 1.2800 adopted by the descending trendline drawn off the September and November lows. Tertiary resistance would possibly relaxation larger nonetheless, because the psychologically-significant 1.3000 mark looms overhead. In need of breaking by every of those areas, USD/CAD rallies could also be thought of short-term recoveries and consolidation amidst a broader downturn that has proven few indicators of exhaustion.
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Additional nonetheless, IG shopper sentiment information reveals retail purchasers stay net-long USD/CAD. Since we usually take a contrarian view to crowd positioning, the info could recommend additional declines on the horizon for USD/CAD. Within the meantime, observe @PeterHanksFX on Twitter for updates and evaluation.
–Written by Peter Hanks, Strategist for DailyFX.com
Contact and observe Peter on Twitter @PeterHanksFX