USDCAD is starting to stage a recovery from intraday lows of 1.39888, as easing crude oil prices helped weaken the Canadian Dollar’s advance on the greenback. Furthermore, Friday’s surprise 50 bps rate cut by the Bank of Canada (BoC) to 0.25% further helped to weaken the Loonie on the day.
The BoC has also launched its version of the asset purchases program already being used by the Federal Reserve, the ECB and BoE as part of the stimulus packages to combat the economic impact of the coronavirus pandemic. The BoC’s new Commercial Paper Purchase Program will see the bank purchasing at least C$5 billion worth of government securities every week.
The USDCAD is up 0.65% on the day as a result. The USD had taken a hammering after yesterday’s unusually high initial jobless claims numbers. Still, the combined effect of the BoC action and easing crude oil price action has helped the USDCAD build further momentum after touching off weekly support levels yesterday.
The USDCAD pair is now trading at 1.14330 as at the time of writing.
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Technical Outlook for USDCAD
The USDCAD touched the 1.40023 support yesterday. This price level is an area where market tops had formed in the weeks ended 21 December 2015 and 8 February 2016. After touching off this area, a further test of this support saw a firm bounce by the USDCAD, and it is now surging towards the next resistance target at 1.43193, where the weekly top of 25 January 2016 is found. However, the minor resistance levels at 1.41514 (20 March low) and 1.42716 (highs of 17 March and 26 March) have to be overcome for this target to be actualized.
On the flip side, rejection at the 1.42716 price level could allow for another retest of the 1.40023 support. If this support eventually gives way, then the downside target formed by the 1.37629 support level could be on the menu.