USD/CAD Upward Channel Remains in Play – Can the Loonie Hold at the 1.3219 Support?
Arslan Butt • 2 min read
The USD/CAD pair closed at 1.32021, after placing a high of 1.32250, and a low of 1.31264. Overall the movement of the USD/CAD pair was bullish throughout the day. The USD/CAD pair rose to its highest level in six days on Monday, thanks to the strength of the broad-based US dollar and the weak Canadian dollar, due to falling WTI Crude Oil prices on the day. The falling crude oil prices, between $ 39 and $ 38, exerted heavy pressure on the commodity-linked Loonie on Monday, ultimately pushing the USD/CAD pair higher.
The US Dollar Index climbed above the 93 level, in an attempt to build a bullish momentum. The strength of the US dollar was due to many factors, including the rising concerns of the second wave of the coronavirus, along with the deadlock over the next round of the US stimulus aid package.
The rising number of coronavirus cases across the globe provided strength to the safe-haven greenback, as investors started to look for a safer option in times of uncertainty.
The increasing number of coronavirus cases have urged governments to re-impose restrictions, while the economies were still recovering from the effects of previous lockdowns. These economic recovery tensions weighed on the market risk sentiment and supported the safe-haven appeal, ultimately pushing the greenback higher, and helping the USD/CAD pair to recover its losses of the previous day.
On the data front, at 19:00 GMT, the New Home Sales report from the US was released, reflecting a decline to 959K in October, against the expected 1025K, weighing heavily on the US dollar, which failed to stop the USD/CAD pair’s gains on Monday. Meanwhile, the talks over the US stimulus package continued, with the US election just over a week away. The chances for a deal between the Democrats and the Republicans remain slim, although progress has been made in the talks. A stimulus before the election would be a coup for President Trump, but the Republicans who control the Senate are unwilling to sign an agreement.
The strength of the US dollar is based on a no-deal scenario before the election, and that pushed the USD/CAD pair up on Monday. This week, the Bank of Canada will release its interest rate decision on Wednesday, where the interest rates are expected to stay intact at 0.25%. However, the comments from the bank will have a high impact on the USD/CAD pair prices.
Daily Technical Levels
Pivot Point: 1.3146
Trading in the USD/CAD is slightly bearish, at the 1.3118 level, where it is finding immediate support at the 1.1370 mark. Closing of candles below the 1.1372 level is likely to lead the USD/CAD price further down, towards the next support area of 1.3120. Conversely, the pair may face resistance at 1.3259. Let’s stay bullish over the 1.3146 level, as the upward trendline may provide support. Good luck!