The USD/CAD pair slipped sharply to form the double bottom pattern around 1.3864 level on the 4-hour chart. The primary reason behind a sharp sell-off in the USD/CAD pair is the risk-on market sentiment, which is increasing demand for crude oil following the report of successful clinical trials of Gilead Sciences’ retroviral drug Remdesivir. The drug will be used to treat those infected by COVID-19, and investors are expecting the market will be back to its feet once this medicine gets success.
With this, demand for oil will be strong again, and due to which, Loonie will gain bullish bias, causing USD/CAD pair to drop. The US dollar draws further offers in the wake of less heaven demand and exert some pressure on the USD/CAD currency pair.
From the technical perspective, the USD/CAD pair’s failure to register any meaningful recovery further indicates that the near-term bearish pressure could not finish soon. Therefore, the range-bound trading action might still be classified as a consolidation phase before the next leg of the pair’s bearish move. Before we see further selling in the USD/CAD pair, the odds of bullish retracement will remain strong. The USD/CAD pair may drive the pair’s prices towards 23.6% or 38.2% Fibonacci retracement level of 1.3915 and 1.3945, respectively.
Entry Price: Buy at 1.38889
Take Profit .1.39389
Stop Loss 1.38489
Profit & Loss Per Standard Lot = -$400/ +$500
Profit & Loss Per Micro Lot = -$40/ +$50