- The US dollar rally hits resistance at 1.3260 and pulls back to 1.3230 area.
- The greenback appreciates 0.6% on the day boosted by risk aversion.
- Concerns about a second COVID-19 wave and weak US data have dampened the market mood.
The US dollar has taken a break on Thursday’s US session after having rallied more than 0.6% so far today, fuelled by a risk-averse sentiment. The USD/CAD accelerated its uptrend after breaking above 1.3160 resistance area, to reach one-week highs at 1.3260 before pulling back to 1.3230 area.
The US dollar appreciates on a risk-off session
The greenback is outperforming its main peers on Thursday favoured its safe-haven status amid a negative market sentiment. Investors’ concerns about the impact of tighter COVID-19 restrictions, with the pandemic spreading fast through world’s major economies, and the unlikelihood of a fiscal stimulus deal in the US are keeping risk appetite in check.
On the macroeconomic front, US data has failed to cheer the markets. Weekly unemployment claims increased by 53,000 to 898,000 last week, beating expectations of 825,000 claims and showing that the labour market recovery is losing momentum. Furthermore, a New York manufacturing activity gauge has deteriorated beyond expectations in October.
USD/CAD: capped below Fibonacci retracement at 1.3260
The USD/CAD has met resistance at 1.3260, right where the 50% Fibonacci retracement of the last two weeks’ decline lies. Above here, the pair would confirm the breach of the near-term bearish trend and aim towards 1.3340 (October 7 high) before testing September highs at 1.3420.
On the downside, the USD/CAD might find support at the 50-day SMA, now at 1.3210. Below there, next potential support levels would be at 1.3145 (intra-day low) and 1.3100 (October 12 low).
Technical levels to watch
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