During the late European session, the USD/CAD pair exhibited sharp selling to drop below 1.34678 support level. Overall, the movement of the USD/CAD pair remained bearish throughout the day. The USD/Cad pair posted losses on the back of the broad-based US dollar weakness and rising crude oil prices.
The weaker US dollar pushed the USD/CAD pair onto the downside on Monday. The US Dollar Index fell from the 96 levels, close to the 95.85 level, weighing on the greenback. Due to the rising number of coronavirus cases in the US, the US dollar lost its safe-haven status.
The record-high number of COVID-19 cases in the US made the outlook for the US economy gloomy because on one side, the US government was reluctant to re-impose lockdown measures, and on the other side, cases of the virus were increasing day by day.
The US coronavirus death count surpassed the 140,000 level, and the total cases that have appeared in the US have risen to over 3.8M. This jeopardized the US dollar’s safe-haven status, as investors became cautious about investing in the greenback, and started favoring other safer assets.
The US dollar, which was weak across the board, due to the absence of any macroeconomic data, dragged the USD/CAD pair down.
On the other hand, the WTI Crude Oil price broke its bearish bias and posted small gains on Monday, amid hopes for a coronavirus vaccine. The first trials in Britain, which included more than a thousand adults, showed that the vaccine could induce strong antibody production and trigger immune responses against the novel coronavirus.
Separate trials in China, involving more than 500 people, showed that most test persons developed widespread antibody immune responses. This news raised hopes that the virus vaccine was not far away, and that the economies would get back to normal soon, causing the oil demand to surge. The hopes for increased energy demand, triggered by hopes for a virus vaccine, gave crude oil prices a push on Monday.
The WTI Crude Oil price was also up following the US Dollar Index that fell below the 96 levels, to 95.85, weighing on the US dollar. The US dollar and crude oil have a negative correlation, which caused crude oil to remain strong against the US dollar, even on Monday.
The increased crude oil prices gave strength to the commodity-linked Loonie, ultimately adding to the USD/CAD pair’s losses. No macroeconomic data was released on Monday, so the USD/CAD pair continued to follow the coronavirus updates and crude oil movements.
The USD/CAD has violated the triple bottom support level on the 1.350 level, and now, the USD/CAD pair is trading at 1.3450 level. The immediate support stays at 1.3443 level. The formation of a hammer pattern on the hourly chart may help us secure a bullish correction in the USD/CAD pair. On the higher side, the oversold pair has the potential to go after 1.3480 and 1,3504 level. Check out a quick trade plan to follow during the U.S. session.
Entry Price – Buy 1.3461
Stop Loss – 1.3421
Take Profit – 1.3501
Profit & Loss Per Standard Lot = -$400/ +$400
Profit & Loss Per Micro Lot = -$40/ +$40
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