USD/CAD: the resumption of the rally of the dollar is probably
01/04/2020
Despite new extraordinary measures to support the US economy taken by the Fed and the US government last week, the dollar is growing again at the start of a new week and month. On Wednesday, USD / CAD is trading at the start of the European session near 1.4250, above the important short-term support level of 1.4180 (200-period moving average on the 1-hour chart).
The coronavirus pandemic has not yet reached its peak in Europe, and in the United States it is gaining momentum, threatening to grow on an even larger scale. Moreover, the economic situation in other countries (outside the United States) with the largest economies is even worse than in the United States.
It is possible that panic sales of assets and risky assets will recur, which will contribute to the continuation of the dollar rally.
Last week, the Bank of Canada again unscheduled lowered its key interest rate by 0.50%, bringing it even closer to zero in order to mitigate the economic damage from the new coronavirus pandemic.
A press release from the central bank also said that the spread of coronavirus and a sharp drop in world oil prices in the aggregate are putting serious pressure on Canadians and the Canadian economy. The Bank of Canada also announced its intention to launch a quantitative easing program (QE) in the form of purchases of government bonds of Canada in the secondary market.
The QE program and a significant reduction in interest rates should help weaken CAD. CAD quotes are also under pressure from a sharp drop in oil prices.
Thus, despite the overbought, the growth of USD / CAD may resume. In case of breakdown of the local resistance level of 1.4350, USD / CAD growth is likely to continue towards the resistance levels of 1.4600, 1.4660 (annual and almost 17-year highs).
In an alternative scenario and in case of breakdown of the support level 1.4180 USD / CAD will go towards the support levels 1.3860 (ЕМА200 on the 4-hour chart), 1.3380 (ЕМА200 on the daily chart).
At the moment, a strong positive momentum is prevailing, making long positions preferable.
Support Levels: 1.4180, 1.3940, 1.3860, 1.3660, 1.3520, 1.3452, 1.3380, 1.3330, 1.3300
Resistance Levels: 1.4350, 1.4600, 1.4665, 1.4700
Trading Scenarios
Sell Stop 1.4170. Stop-Loss 1.4280. Take-Profit 1.4100, 1.3940, 1.3860, 1.3660, 1.3520, 1.3452, 1.3380, 1.3330, 1.3300
Buy Stop 1.4280. Stop-Loss 1.4170. Take-Profit 1.4350, 1.4600, 1.4665, 1.4700
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