Today in the early Asian trading session, the USD/CAD currency pair extended its previous session bullish bias and hit the session high around above 1.3300 level. However, the bullish sentiment around the currency pair was being supported by a pickup in the U.S. dollar demand and the ongoing drop in crude oil prices, which tend to undermine demand for the commodity-linked currency – the loonie. Hence, the broad-based U.S. dollar succeeded in gaining some positive traction on the day amid growing market worries about surging coronavirus cases in Europe and the United States, which keeps the market trading sentiment under pressure and undermined the safe-haven U.S. dollar. In addition to this, the long-lasting impasse over the next round of the U.S. fiscal stimulus measures added further burden on investors’ sentiment and benefitted the USD’s status as the global reserve currency. Across the pond, the reason for the currency pair bullish bias could also be attributed to the weaker crude oil prices, which undermined the demand for the commodity-linked currency the loonie and contributed to the currency pair gains. As of writing, the USD/CAD currency pair is currently trading at 1.3320 and consolidating in the range between 1.3319 – 1.3326.
As we all know that the market trading sentiment remains depressed during the Asian trading session as the concern about the second wave of coronavirus infections, the lockdown measures to control the outbreak in several countries, which kept the global risk sentiment under pressure. Thus, the ever-increasing cases of coronavirus across the globe, destroying hopes of any V-shaped economic recovery. This, in turn, urged investors to invest their money into safe-haven assets.
Additionally, the lack of clarity over the much-awaited coronavirus (COVID-19) stimulus bill also keeps the investors cautious. In the meantime, the U.S. political uncertainty also exerted downside pressure on the market trading sentiment. Besides, the long-lasting tussle between the world’s two largest economies also played its major role in undermining the market trading sentiment. This, in turn, boosted the U.S. dollar and was seen as a key factor that kept the currency pair higher.
This, in turn, the broad-based U.S. dollar succeeded in extending its early-day gains and remained well bid on the day as investors turned to the safe-haven in the wake of risk-off market sentiment. However, the greenback gains could be temporary due to the worries that the economic recovery in the U.S. could be stopped because of the reappearance of coronavirus cases. Besides this, the U.S. dollar gains were further boosted by a lack of progress toward a U.S. stimulus package, which puts traders in a cautious mood. However, the gains in the U.S. dollar kept the currency pair higher. The dollar index, which pits the dollar against a bucket of 6-major currencies, stood at 93.472.
Across the pond, the crude oil prices failed to stop its previous-day losing streak and witnessed some dramatic declines around below the $37.00 mark. However, the reason for the bearish bias around the crude oil prices could be attributed to the ever-increasing COVID-19 worries, which raised fears of renewed lockdown measures and depressed hopes for a swift recovery in the fuel demand. Across the pond, the declines in the crude oil prices were further bolstered after the surprisingly large U.S. crude stockpile build for last week reported by the government, which ultimately strengthened fears about depleting demand for fuel amid the worsening global coronavirus pandemic. Thus, the declines in crude oil prices undermined demand for the commodity-linked currency the loonie and contributed to the currency pair gains.
Looking forward, the market traders will keep their eyes on the USD moves amid the lack of major data/events on the day. Furthermore, the risk catalyst like geopolitics and the virus woes, not to forget the Brexit, will also be key to watch for the fresh direction.
Daily Support and Resistance
Pivot Point 1.3175
Entry Price – Sell 1.32895
Stop Loss – 1.33295
Take Profit – 1.32395
Risk to Reward – 1:1
Profit & Loss Per Standard Lot = -$400/ +$400
Profit & Loss Per Micro Lot = -$40/ +$40
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