The USD/CAD comes under the radar today for some reasons. Firstly, the bank of Canada is scheduled to make its monetary policy decisions known to the market this week. Secondly, rising crude oil prices have pitted the Loonie against the greenback, which has seen some tailwinds recently as a result of rising long-term US Treasury yields.
Economists at Standard Chartered Bank have provided their latest insight into the pair. They predict that the pair will continue to inch towards 1.20 in the coming weeks. They are suggesting traders average into short positions on the greenback, citing that the US Dollar could be strengthened by higher bond yields. The bank sees a situation where risk-tolerant currencies such as the Aussie and Kiwi Dollar, and the Canadian Dollar would benefit in their respective pairings with the greenback, provided there is “no further pandemic setback”.
Standard Chartered also says that the domestic ramp-up in coronavirus vaccinations in Canada should be a catalyst for the USD/CAD to resume the downtrend towards 1.2000.
Technical Levels to Watch
Studying the 4-hour chart reveals the boundaries of a triangle which is more symmetrical than ascending in nature. A breakdown of the triangle’s lower border is required to breach the 1.26647 support, bringing into the picture a potential target at 1.26219 in the first instance. Below this level, 1.25862 and 1.25323 could form additional targets to the south.
On the other hand, a bounce from 1.26647 is expected to target the 1.27315 resistance, with 1.27831 and 1.28342 serving as an additional target to the upside.
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USD/CAD Daily Chart
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