Downside Support In View For The USD/CAD - Forex News by FX Leaders
USD/CAD

Downside Support In View For The USD/CAD

Posted Tuesday, March 3, 2020 by
Shain Vernier • 1 min read

For the USD/CAD, it’s all about FED rates cuts and market fallout. Earlier, the U.S. Federal Reserve (FED), decided to slash the Federal Funds Target Rate by ½ point. This action was historically aggressive, with few precedents. In fact, the last such move took place in 2008 amid the global financial crisis. At this point, one has to wonder if we are on the brink of another.

The coronavirus continues to dominate headlines, with the first U.S.-based fatalities being reported in Washington State. Although the developments came as little surprise, the outbreak continues to rattle the markets. So, the FED did the only thing that it knows how to do ― cut rates and hope for the best. Thus far, the markets are skeptical that further quantitative easing is the right answer.

On the commodity front, prices are on the uptick. Both GOLD and WTI crude oil are rallying, with bullion posing a 3 percent intraday gain. Unfortunately for the Loonie, the boost to crude oil hasn’t translated into a sell-off in the USD/CAD.

USD/CAD Rallies Following Rate Cut

Last Friday brought us a daily Doji formation in the USD/CAD. Since that time, we have seen heavy volatility and prices rotate around the 1.3350 level. 

USD/CAD, Daily Chart
USD/CAD, Daily Chart

Here are two support levels to keep an eye on going into this week’s crude oil inventory cycle:

  • Support(1): Daily SMA, 1.3294
  • Support(2): Bollinger MP, 1.3283

Bottom Line: In the event we see crude oil make a run at $50.00, a buying opportunity may set up in the USD/CAD. Until tomorrow’s EIA report, I will have buy orders in the queue from 1.3304. With an initial stop at 1.3274, this trade produces 25 pips on a sub-1:1 risk vs reward strategy.

Check out our free forex signals
Follow the top economic events on FX Leaders economic calendar
Trade better, discover more Forex Trading Strategies

About the author

Shain Vernier // US Analyst
Shain Vernier has spent over 7 years in the market as a professional futures, options and forex trader. He holds a B.Sc. in Business Finance from the University of Montana. Shain's career includes stretches with several proprietary trading firms in addition to actively managing his own accounts. Before joining FX Leaders, he worked as a market analyst and financial writer.
Related Articles
Comments

Leave a Reply

avatar
  Subscribe  
Notify of