During Tuesday's Asian session, the USD/CAD currency pair erasing its early-day gains to 3-weeks high but still trading above the key 1.40 psychological mark. The currency pair extended its previous day's strong intraday recovery move from the 1.3900 marks and rose above mid-1.4000 earlier in the morning. However, multiple factors like weaker U.S. dollar and rise in the oil prices kees the currency pair gains limited. At this particular time, the USD/CAD currency pair is currently trading at 1.4014 and consolidates in the range between the 1.4002 - 1.4064.
The commodity-linked currency Loonie came under pressure after the WTI prices fell, and hence, USD/CAD started to move in an upward direction to post gains. Furthermore, adding in the upward movement of USD/CAD pair prices was the strength of the U.S. dollar across the board on Monday amid the increased U.S. Treasury Yields. The U.S. Dollar Index, which measures the value of the dollar against a basket of six currencies, rose 1.03% on that day and reached to 100.27.
There was no economic data from USD or CAD side on Monday, so the movement of pair was attributed to the WTI crude oil prices or broad-based U.S. dollar strength. On News front, the Deputy PM of Canada, Chrystia Freeland, said that Canada and the U.S. were working on plans to deal with the increased cross-border traffic after both countries have eased down in restrictions. Canada almost reached near the death toll of 5000 by standing at 4871; the total cases of coronavirus are close to 69,000 in Canada with 32,000 active cases.
Fig 1 - USDCAD 4H Chart
Daily Technical Levels
Pivot Point: 1.3988
Technically, the USD/CAD is now trading with a bearish bias at 1.3985, having formed three black crows on the 4-hour timeframe. A drop in the USD/CAD prices may lead the pair lower towards an immediate support level of 1.3965. Below 1.3965, the USD/CAD may drop further until 1.3900, but that will be more practical if the U.S. retail sales fail to surprise the market. On the higher side, resistance stays at 1.4075 and 1.4165. Let's wait for the market to test the 1.3900 area to decide when to enter the market. Good luck!