Canadian Dollar, Loonie, USD/CAD Talking Points:
- USD/CAD put in an aggressive breakout in March[1], and has since started to pullback.
- That bullish breakout stopped 21 pips shy of the 17-year-high.
- The ensuing snapback has grown in aggression, with price action now testing around the 1.4000 psychological level.
USD/CAD Builds into Descending Triangle After Aggressive Bullish Breakout
The past few weeks have been somewhat of a constant in the bad news department for both US and Canadian economies. The major hit seen in Oil[2] prices has certainly had an impact on the Canadian Dollar[3], but its been the spread on the novel coronavirus in both countries that’s been really troubling. And from an economic standpoint, it’s a brute force of risk as there’s just so much utter uncertainty around everything, with Central Banks from both the US and Canada hurriedly shuffling in stimulus policies designed to keep markets afloat even with a near-certain economic slowdown on the horizon.
In USD/CAD[4], this has not gone unnoticed, marked by a pronounced bullish run in the month of March as a potent combination of USD-strength and Canadian Dollar weakness[5], aided by a massive bearish move in oil prices, pushed the pair up to fresh four-year-highs. USD[6]/CAD pushed up to the 1.4668 level, which is a mere 21 pips away from the 17-year-high in the pair; showing some fairly clear evidence that buyers didn’t yet want to encounter that level just yet.
USD/CAD Monthly Price Chart
Chart prepared by James Stanley[7]; USDCAD on Tradingview[8]
USD/CAD Driven by a Potent Combination of Drivers
There’s a few key drivers to keep in mind when analyzing anything around USD/CAD. The month
