The USD/CAD was closed at 1.35383 after a high of 1.36226 and a low of 1.35044. Overall the movement of USD/CAD remained bearish throughout the day. The USD/CAD pair continued its previous day's trend and dropped for 3rd consecutive day on Tuesday. The strength of the Canadian dollar dragged the pair for 3rd day in a row, and the pair dropped near 1.3500 level. At 17:30 GMT, the Foreign Securities Purchases from Canada increased to 49.04B from the expected 5.00B and supported the Canadian dollar, which in turn weighed on USD/CAD pair prices.
On the other hand, Retail Sales increased to 17.7% against the expected 7.9% and supported the U.S. dollar. Robust Retail Sales data from the United States kept a lid on additional losses in the USD/CAD pair on Tuesday.
However, the downward movement of the pair was triggered after the comments of Federal Reserve Chairman, Jerome Powell who painted a grim economic outlook and said that full recovery of the economy would be uncertain until people were confident that the virus could be contained.
On Crude oil front, the WTI crude oil gained on Tuesday and reached near $40 on the back of the risk-on market sentiment and provided strength to commodity-linked currency – Loonie. It dragged the USD/CAD currency pair on the downside towards the low of 1.3500.
Analysts believe that CAD gave more importance to the global environment than the Bank of Canada's actions. The global climate has been gloomy and depressed lately with ongoing economic crisis along with the geopolitical & trade rivals. Bank of Canada has cut its interest rates to 0.25% level and has launched lending programs and asset purchase programs in government, provincial, and corporate bonds.
Daily Technical Levels
Pivot point: 1.3557
Technically, the USD/CAD pair is trading sideways within a narrow trading range of 1.3665 - 1.35100. The investors seem to wait for the FED Chair Jerome Powell Testimony to determine which side to breakout. The dovish stance of the Fed Chair can trigger a bearish breakout below 1.3523 level and lead Loonie towards 1.3450 and 1.3357 area. Alternatively, the hawkish tone can lead the pair towards 1.3660 level today.