Today in the European trading session, the USD/CAD currency pair successfully extended its previous session winning streak and consolidated the previous day’s strong positive move to a 6-week high. However, the pair’s positive tone could be associated with the broad-based US dollar on-going strength, backed by the risk-off market tone.
The reason for the USD/CAD pair bullish bias could also be attributed to the steep fall in crude oil prices, which tend to weaken the demand for the commodity-linked currency the loonie, and contributed to the currency pair gains. Currently, the USD/CAD currency pair is currently trading at 1.3314 and consolidating in the range between 1.3296 – 1.3346. Moving on, the traders seem cautious to place any strong position amid expectations that the Fed Chair Jerome Powell will reaffirm to keep interest rates lower for longer during his congressional testimony later on the day.
Intensifying probabilities of fresh lockdown measures to control the 2nd-wave of coronavirus outbreak pushed global equity markets down. This, in turn, boosted the US dollar’s status as the reserve currency. The latest headlines suggest that the US Secretary of State Mike Pompeo took help from France, Germany, and the UK to reject China’s South China Sea claims at the United Nations (UN).
The broad-based US dollar has resumed its gaining streak at the USD front since the European session started and was being supported by some heavy selling pressure around the equity market. Meanwhile, the concerns about rising US-China tensions also increased the safe-haven demand in the market, which also helps the US dollar as it safe-aven status.
The crude oil prices failed to stop its previous session across the ocean, losing streak and taking rounds below the $40.00 mark. Nevertheless, the bearish bias around the crude oil prices could be attributed to the renewed worries over the economic recovery after the coronavirus (COVID-19) resurgence in Europe and the United Kingdom.
Besides, the possibilities of Libya resuming oil exports added further bearish pressures around the crude oil prices. Thus, the declines in oil prices undermined demand for the commodity-linked currency the loonie and contributed to the currency pair gains.
Entry Price – Buy 1.32706
Stop Loss – 1.32306
Take Profit – 1.33106
Risk to Reward – 1:1
Profit & Loss Per Standard Lot = -$400/ +$400
Profit & Loss Per Micro Lot = -$40/ +$40
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