During Thursday’s European trading session, the USD/CAD currency pair failed to stop its Asian session from losing streak and dropped further below the mid-1.3200 level, mainly due to the U.S. dollar weakness triggered by gloomy U.S. economic outlook and lingering uncertainty over the U.S. stimulus package.
On the other hand, the weaker oil prices due to the OPEC bearish fuel demand prediction, and US-China on-going war, undermined the commodity-linked currency the loonie which helped the currency pair to limit its deeper losses. Currently, the USD/CAD currency pair is currently trading at 1.3215 and consolidating in the range between 1.3209 – 1.3257.
Considering the on-going condition between the US-China, China’s Assistant Commerce Minister said he hopes the U.S. will create conditions for the implementation of the phase-1 trade deal. He further added that the COVID-19 and U.S. export control measures hurt Chinese purchases on U.S. goods and services. However, traders gave little attention to the above statement.
On the other hand, the on-going deadlock over additional stimulus measures to support the economic recovery from the coronavirus pandemic also weighed on the market risk sentiment.
This, in turn, the broad-based U.S. dollar failed to gain bullish momentum and reported losses on the day as the United States was still fighting the coronavirus. However, the weakness in the U.S. dollar kept the pair under pressure.
At the crude oil front, the WTI crude oil prices remain depressive around $42 levels as fears about the lower oil demand fueled after the OPEC said in its monthly report that the fuel demand will likely fall more than expected. This statement initially overshadowed the U.S. government data, which showed a decline in inventories and suggested that demand is recovering despite the coronavirus pandemic. However, the losses in the crude oil undermined the commodity-linked currency the loonie, which helped limit the pair’s deeper losses.
Looking forward, the market players will closely follow the release of the U.S. Initial Weekly Jobless Claims, which will affect the USD price dynamics and produce some meaningful direction for the currency pair. In the meantime, the traders will also keep their eyes on the news concerning the U.S./China.
Technically, the USD/CAD has formed a descending triangle pattern that provided support at 1.3235 level, and it has now been violated. The USDCAD pair has violated the double bottom support area of 1.3235 level. Closing of candles below this level confirms a breakout; therefore, the odds of further selling below the 1.3235 level increase, and it can lead to USD/CAD prices until 1.3160. A slight bullish retracement could be seen until 1.3235 level before the pair continues trading lower. Check out the trade plan…
Entry Price – Sell 1.32282
Stop Loss – 1.32682
Take Profit – 1.31882
Risk to Reward – 1:1
Profit & Loss Per Standard Lot = -$400/ +$400
Profit & Loss Per Micro Lot = -$40/ +$40
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