The rebound from 1.3400 satisfied USD/CAD technical and fundamental criteria and the loonie starts the week trading at 1.3672. Joseph Trevisani, an analyst at FXStreet, marks the 1.3400 level as important support set to hold any downside.
Key quotes
“The space below 1.3400 was heavily traded between June 2018 and March 2020. It is replete with support lines. The market’s cursory attempt to penetrate this zone and the rapid reversal shows that an effort to take the USD/CAD lower will require technical preparation or a shift in the fundamental outlooks for the US and Canadian economies.”
“Although the pandemic had abated and the countries that have reopened their economies show no signs of second wave of infections and fatalities, that view will need to be confirmed in the days ahead before the currencies will abandon the risk-aversion range established from early March. In the absence of a replacement scenario, the substantial technical difficultly below 1.3400 will present a formidable barrier to a lower USD/CAD.”
“Until either the US or Canadian economy offers a compelling case for a faster recovery the recent ranges will beckon. Historically the US has a more flexible and responsive economy and would be expected to resume growth faster, but with the political turmoil in American cities that may not be a case this election year.”
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