Today in the European trading session, the USD/CAD currency pair stopped its previous day losing streak and recovered slightly around the level of around 1.3570. However, the modest gains in pair could be attributed to the weaker oil prices, which eventually undermined the demand for the commodity-linked currency the loonie and contributed to the currency pair gains. On the other hand, the broad-based U.S. dollar weakness in the wake of the risk-on market limited additional gains in the pair, at least for now. Currently, the USD/CAD currency pair is currently trading at 1.3566 and consolidating in the range between 1.3551 and 1.3576.
As we all well aware that the trading market has been flashing green since it started the day. Nevertheless, the reason behind the risk-on market sentiment could be attributed to the upbeat report of United States Non-Farm Payrolls, which showed that the U.S. economy created 4.8 million jobs in June against market expectations of 3 million. In the meantime, the unemployment rate dropped more than expected to 11.1% from 13.3% previously, which raised the investor's confidence as they believed that the worse of the coronavirus pandemic was over.
On the other hand, the upbeat trading sentiment was further bolstered by the reports of another vaccine trial, which showed positive results for COVID-19. The Biopharmaceutical New Technologies (BioNTech) announced that the potential coronavirus vaccine – co-developed with the U.S. pharmaceutical giant Pfizer had shown positive results triggered by the robust immune response in the early-stage human trials. However, this positive news remained supportive of the positive tone around the equity markets.
At the crude oil front, the WTI crude oil prices failed to extend its previous day modest gains and dropped to $40.13 level while represented 0.45% losses on the day. However, the reason for the selling bias in the oil prices could be attributed to the heightened concerns about the second economic lockdown in the U.S. triggered by the surged number of confirmed coronavirus cases, which increased worries that demand recovery of crude oil could fell again.
Thus, the selling bias in the crude oil prices undermined the commodity-linked currency the loonie and exerted some positive impact on the currency pair. For now, the traders will keep their eyes on Hong Kong and virus updates. In the absence of U.S. players due to the Independence Day long weekend, the global markets may witness a dull trading session ahead.
Daily Support and Resistance
Pivot Point 1.3583
On Friday, the USD/CAD is consolidating in a tight trading zone of 1.3550, and beneath this, the following support level is anticipated to be found at around the 1.3480 level. On the hourly chart, the 50 periods of EMA support the selling bias, along with the MACD and the RSI. Let's consider taking sell trades below the 1.3578 level today, to target 1.3540 to begin with. Good luck!