USDCAD – Loonie holds the Upper hand

<h3>USDCAD, H4</h3>
<p><strong>USDCAD</strong> has settled in the lower <span><strong>1.3200</strong></span>s, above the eight-month low of yesterday, at 1.3190. A weakening US Dollar, coupled with perky oil prices, have been weighing on the pair in recent months, which we anticipate will retain a down-trending bias. USDCAD pair has been trending lower, albeit with waning momentum, since mid-March. The global economic recovery from lockdowns, which were at their zenith in April, has been instrumental in USD-CAD&#8217;s downtrend, with the Canadian currency rising concomitantly with oil prices while the US currency has waned as a safe haven unit, and with negative real US yields (on the view that the Fed may become strategically more tolerant of inflation risk) eroding the greenback&#8217;s performance. The Canadian Dollar will continue to remain sensitive to fluctuations in the US dollar and oil prices. Downside risks for the Canadian Dollar include the OPEC+ group&#8217;s course to easing output quotas, which could weigh on oil prices, alongside the coronavirus pandemic and geopolitical tensions, should they derail the recovery in global asset markets.</p>
<p>Technically the pair has been under the 20-day moving average since <strong>July 15</strong> and this forms a key resistance at <span><strong>1.3360</strong></span>. The H4 chart has tracked lower all week with support at today&#8217;s S1 and yesterday’s low at <strong><span>1.3190</span></strong>, below the psychological 1.3200 level. The 20-period moving average sits at <strong><span>1.3265</span></strong>.</p>
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<p><strong>Stuart Cowell</strong></p>
<p><strong>Head Market Analyst</strong></p>
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