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USD/CAD Flashing Green Around Above 1.3200 Marks Amid Combination Of Factors!


The USD/CAD succeeded in extending its previous session gains and hit the session's high well above 1.3200 level, mainly due to the broad-based U.S. dollar strength backed by the downbeat trading sentiment. The currency pair gains could also be credited to the weaker oil prices, which ultimately threatened the demand for the commodity-linked currency the loonie and devoted to the currency pair gains. Currently, the USD/CAD is currently trading at 1.3201 and binding in the area between 1.3157 - 1.3209.

Be it worries over the second wave of the Covid-19 virus and uncertainty surrounding the U.S. fiscal package, not to forget renewed tussle between the US-China; all these factors weighed on the market trading sentiment. Apart from this, the sluggish U.S. jobs data also add a burden to the risk sentiment.

The trade war agreement between the United States and China remain on the slippery track as U.S. President Donald Trump did not appreciate the comments of the Chinese commerce department that trade talks will happen soon. The Trump administration warned China that President Trump was furious over Beijing and did not want to meet China. This intensifying tussle continues to weigh on the market trading sentiment and underpinning the safe-haven assets.

As in result, the broad-based U.S. dollar flashing green and taking bids as investors preferred the safe-haven asset mainly due to concerns over the US-China war and virus woes. However, the U.S. dollar gains could be short-lived or temporary due to doubts about the U.S. economic recovery in the wake of the dismal Jobs data. Hence, the gains in the U.S. dollar kept the currency pair higher. Whereas, the U.S. Dollar Index that tracks the greenback against a bucket of other currencies rose to 93.047.

At the crude oil front, the WTI crude oil prices reporting losses on the day. However, the reason for the decline in crude oil could be attributed to the concerns about worsened US-China relations, and the intensifying resurgence of virus cases, which fueled the demand concerns. Thus, the declines in oil prices undermined demand for the commodity-linked currency the loonie and contributed to the currency pair gains.

Daily Support and Resistance

S1 1.3046

S2 1.3123

S3 1.3153

Pivot Point 1.3199

R1 1.323

R2 1.3276

R3 1.3352

The USD/CAD has completed 61.8% Fibonacci retracement at 1.3228 level, and now it's heading further higher until 1.3240 level, which is extended by 50 periods EMA resistance. On the higher side, the USD/CAD can go further higher until the next resistance level of 1.3270 upon the breakout of 1.3240 level. Conversely, the support holds at 1.3165 level, and below this, the next support can be found around 1.3135. Below 1.3135, the pair can drop further until 1.3098 level. The RSI and MACD are in support of selling, but it will be better to wait for a 50 EMA retest before placing any bets in USD/CAD pair. Good luck!

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