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USD/CAD Retests Triple Bottom - Eyes on 1.2511 Support Breakout

EagleFX

The USD/CAD closed at 1.35219 after placing a high of 1.36297 and a low of 1.35182. Overall the movement of USD/CAD persisted bearish throughout the day. After continuously posting gains for three consecutive days, the USD/CAD pair dropped on Monday after the comments of Canada's Governor Tiff Macklem and rising crude oil prices along with the weakness of the US dollar.

On Monday, Governor Macklem said that the Canadian economic recovery from COVID-19 will be prolonged and bumpy. He said that the benchmark interest rate will remain at 0.25 and will not go any further lower, but other stimulus efforts were on the way. In his initial speech as governor, Tiff Macklem said that central banks were expecting to see the growth in the third quarter of the year as people were back to work now, and restrictions were somehow eased. But he also informed that Canadians should not expect any short and sharp recovery, but the economy will recover over the coming months. He said that uneven reopening of economies across the provinces and industries and the unknown course of consumer confidence, along with the jobless rates would likely inflict lasting damage to the economy and demand & supply.

He added that maintaining social distancing means the disturbing workplace environment and less productivity, along with many services that will be difficult to deliver. He said that not everybody's job would come back as the productive capacity of the economy will take hit from the crisis. Macklem added that BoC's main concern was to avoid a persistent drop in inflation by helping Canadians get back to their jobs.

On the other hand, the West Texas Intermediate Crude oil went above $40 and gave strength to commodity-linked currency Loonie. The strength of Loonie dragged the USD/CAD pair towards the downside at the starting day of the week. Furthermore, the US dollar was also weak due to the rising number of coronavirus cases in North & South America, which indicated that the US economy would have to suffer more if the virus was not contained again. This weighed on the US dollar, and the weakness of the dollar added to the downfall of USD/CAD pair prices on Monday.


Daily Technical Levels

Support resistance

1.3481 1.3596

1.3441 1.3671

1.3366 1.3711

Pivot Point: 1.3556

The USD/CAD is facing strong resistance around 1.3560 level, which is extended by an upward trendline. On the 2 hour timeframe, the USD/CAD has also formed a descending triangle pattern, which is supporting the pair round 1.3510. Below this, the USD/CAD pair can drop further until 1.3430. The 50 periods EMA is also extending solid resistance at 1.3570, and below this, the USD/CAD pair can face solid selling bias. Let's wait for entering a sell trade below 1.3510 level today. Good luck!

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