- The US dollar fails at 1.3700 and dives to three-day lows neat 1.3600.
- The safe-haven greenback loses ground despite the mild risk-off sentiment.
- The CAD appreciates sharply following a historic decline in the Canadian GDP.
The greenback has accelerated its reversal from 1.3700 on the North American trading session, to give away previous gains and reach session lows right above 1.3600. The Canadian dollar has been practically unaffected by the downbeat Canadian GDP data and is appreciating sharply against the USD.
The US dollar gives away early gains
The US dollar opened the day on a bid tone, favored by the risk-averse mood with investors’ focus back on the growing COVID-19 cases and the possibility of a second wave of lockdowns that might curb economic recovery.
Against this backdrop, the US dollar and attempted another assault to the 1.3700 resistance where the pair was rejected for the third consecutive time in as many days. The USD has been trading lower ever since, with the Canadian dollar accelerating its recovery in the North American afternoon session.
The pair has been unfaced by the release of the Canadian GDP preliminary estimate, which has shown an unprecedented 11.6% decline in April. This reading follows a 7.5% decline in March and reports contractions on all sectors of the economy, showing the impact of the coronavirus lockdown in the Canadian economy.
USD/CAD remains capped below 1.3715 resistance
The pair has been unable to break beyond the resistance area at 1.3700/15 and is losing ground fast, breaking below the base of the last three-days consolidative range at 1.3647. On the downside, below 1.3606 (June 25 low) next potential support levels are 1.3558 (100-SMA in 4-hour charts) and 1.3520 (Jun 24 lows).
On the upside, the pair should return above previous lows at 1.3645/50 to ease bearish pressure and aim towards the 1.3700/15 level (June 26, 29 highs) and 1.3740 (June 1 high).