The USD/CAD currency pair extended its early-day losses and dropped to the multi-year low near 1.3340 level of broad-based U.S. dollar weakness. The U.S. dollar was lower because of the worries that the second wave of COVID-19 cases in the United States could collapse the recovery in the world's biggest economy. The reason for the sharp declines in the currency pair could also be attributed to the mild gains in the crude oil prices that underpinned the commodity-linked currency the Loonie and contributed to the currency pair's declines. At the moment, the USD/CAD currency pair is currently trading at 1.3359 and consolidating in the range between 1.3338 - 1.3388.
The U.S. economy remained on board as numbers of coronavirus cases repeatedly increasing across the globe. As per the latest report, the number of confirmed coronavirus cases in the Arizona state raised by 2,107 to a total of 165,934 so far while the death toll rose by 104 to 3,408 and the current hospitalization fell by 62 to 2,564. Apart from this state, the number of confirmed coronavirus cases in the Florida state increased by 9,230 to a total of 441,977, while the deaths toll was up by 191 to 6,240 and the hospitalization declined by 75 to 9,023 according to Florida's Department of Health statement.
Despite the heightened fear of the coronavirus in the U.S., the U.S. policymakers still had differences in phase 4 COVID-19 bill. The House Speaker Nancy Pelosi and the White House Chief of Staff Mark Meadows recently ruined expectations that the U.S. policymakers will soon deliver the much-awaited fiscal package. They indicated that the lack of progress over the much-awaited stimulus was due to the difference between the Republicans and Democrats. This gloomy updates also added pressure on the U.S. dollar. The dovish Fed expectations also exerted some pressure on the U.S. dollar, which kept the USD/CAD currency pair down.
At the US-China front, the tussle between the United States and China remained as both parties were engaged in cross-firing. The tit-for-tat closures of consulate offices in Houston and Chengdu triggered the most serious escalation of tensions between the U.S. and China. As in result, both nations could be looking at an option for a total breakdown of relations within the next few months. This could hurt the trade deal that exists between the two countries. This gloomy updates also weighed on the U.S. Dollar.
As in result, the broad-based U.S. dollar hit the new 22-month's lowest level as the United States crisis of virus could fade hopes for a quick economic recovery, which kept the investors cautious. However, the losses in the U.S. dollar kept the currency pair lower. WTI crude oil prices took bids above $41 on the day backed by the surprise draw in U.S. Inventories at the crude oil front. Inventories of crude oil in the U.S. fell by 6.8 million barrels last week to 531 million barrels at the data front, data from industry group the American Petroleum Institute showed on Tuesday.
Looking forward, the market players will closely follow the U.S. Fed meeting wherein the U.S. central bank will likely keep rates unchanged and will sound dovish on the day.
Daily Support and Resistance
Pivot Point 1.3378
The USD/CAD is consolidating with a mixed sentiment near 1.3385. Simultaneously, overall trading sentiment continues to be bearish as the pair trades within a bearish channel that produces resistance at the 1.3385 mark. A bearish breakout at 1.3362 could prolong sell-off unto the next support mark of 1.3318. Additional selling sentiment could be seen beneath the 1.3318 level. Overall, the RSI and MACD also signal bearish bias in the pair. Hence, we should be seeing for selling trades beneath the 1.3360 level, to seize a quick 50 pips. Good luck!