Canadian Dollar, CAD, USD/CAD, Loonie Price Analysis
- After an outsized rush of volatility in the first two-and-a-half months of the year, USD/CAD[1] price action has calmed into a range-bound backdrop.
- While mean reversion has been the theme over the past few weeks, that may not last for long as Friday’s economic calendar[2] brings employment reports out of both the United States and Canada – producing the potential for heavy volatility in USD[3]/CAD[4].
USD/CAD: From Resistance to Support and Back
As looked at last week, USD/CAD was holding resistance around the psychological level of 1.4000[5] on the chart, and this has previously been a big level in the pair as there’s been but a couple of months in which the pair has traded above this level over the past 15 years. Notably, this level came into play in January of 2016 after a bullish trend that was almost five years and 5,000 pips in the making ran into a brick wall of resistance. January of 2016 produced an inverted hammer on the monthly chart; and February saw follow-through as sellers continued to push – and for almost four full years price action in USD/CAD remained subdued below the 1.4000 level. Until March of 2020, that is.
USD/CAD Monthly Price Chart
Chart prepared by James Stanley[6]; USDCAD on Tradingview[7]
The month of March brought a flurry of themes to the fray, key of which was fear emanating from near-global shutdowns in response to the spread of the novel coronavirus. This amounted to a strong topside push in the US Dollar[8] as capital flows sought out safer harbors, and US Dollar price action jumped by as much
