USD/CAD holds to recent losses, finds support at key short-term uptrend line

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  • Loonie holds to recent gains while DXY retreats after a 5-day rally. 
  • USD/CAD pair challenges key support but remains sideways around 1.3450. 

The USD/CAD continues to consolidate on a quiet session around 1.3430. The pair is holding firm to the losses that followed the announcement on Friday that the US reached a deal with Canada and Mexico to lift tariffs on steel and aluminum imports, increasing expectations that the new North American trade deal would be ratified. 

On Friday, USD/CAD dropped from weekly highs above 1.3500 and bottomed today 1.3414 before rebound modestly back to the 1.3435 area, where it trades as of writing, consolidating most of the recent losses. 

A weaker US Dollar across the board weigh on the pair and kept it around the 1.3430 area. The loonie remains strong after Friday’s events and despite the recent correction in crude oil prices. The WTI is around the same level it had on Friday after pulling back from $63.60 a barrel to $62.50. 

Volatility across the currency market is extremely low at the moment with majors moving in small ranges. Data and comments from authorities today were ignored by market participants. In the US the key event ahead are the FOMC minutes to be released on Wednesday. 

In Canada today is a holiday and later during the week data from retail and wholesale trade is due. “A solid month for March GDP won’t be enough to rescue Q1 growth from a sub-1% pace. But it would help position Q2 for a nice rebound, in an economy that is neither as weak as it looked in the last two quarters, nor as strong as it will appear in the coming months’ rebound”, wrote Avery Shenfeld, from CIBC Research.

USD/CAD Short-term levels to watch 

To the downside, the immediate support might be seen at the uptrend line from the April low see at 1.3410/15, also today’s daily lows. A break lower would signal more losses ahead and a test of 1.3400. On the upside, the immediate resistance might be seen at 1.3445 (US session high), followed by 1.3460 and 1.3485.

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