Novox 12.4 Reference of Fx market
CANADIAN DOLLAR PRICE FORECAST: WILL USD/CAD WEAKNESS PERSIST?
The US Dollar has bled lower for months in the wake of its initial surge during the early days of the coronavirus pandemic. With the Fed committed to maintaining its accommodative stance and talks of further fiscal stimulus taking place in Washington, the case for further USD weakness can be made. On the other hand, a healing global economy has seen sectors like energy and risk-sensitive currencies like the Canadian Dollar recover lost ground.
Together, these themes have helped push USD/CAD lower for months and a recent break beneath crucial support might have opened the door for further losses. To that end, 1.2929 – the November 9 swing low – had served as an important level working to stave off further losses but with price plunging beneath, USD/CAD seems vulnerable to a continuation lower.
USD/CAD PRICE CHART: DAILY TIME FRAME (SEPTEMBER 2018 – DECEMBER 2020)
Should bears look to drive the pair lower, subsequent support is rather sparse until the 1.2800 area which coincides with the October 2018 swing low. That being said, USD/CAD has already fallen considerably and shorter-term recoveries are not out of the question. Given the degree to which USD/CAD has slipped over the last few months, however, prior support might serve as resistance going forward making attempted recoveries all the more arduous.
USD/CAD PRICE CHART: 4 – HOUR TIME FRAME (JUNE 2020 – DECEMBER 2020)
As a result, potential resistance resides around the 1.2952, 1.3000 and 1.3100 levels which have each shown their ability to influence price in the past – albeit to varying degrees. Still, the longer-term fundamental outlook and recent price trend in the last few months result in a bearish bias in my opinion, making USD/CAD a candidate for short exposure despite recent losses.