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For the fourth time in eight weeks the USD/CAD reached the support band of its two month range at 1.3850-1.3880 and failed to make more than a cursory penetration. The retreating tops for the past month give an indication of sentiment and eventual direction as markets wait for a trigger, FXStreet’s analyst Joseph Trevisani reports.

Key quotes

“Market actions points to an eventual surrender of the US risk premium, likely in a rapid move similar to the one week vault from 1.3400 in early March. Without new signs that the pandemic is regaining potency the USD/CAD will return to its pre-viral levels. The question is whether the decay of time or a trigger will prompt the move lower.”

“Canadian statistics for March were better than forecast, perhaps less bad is a more accurate though displeasing term. April’s numbers were largely as expected. It will be the differential between the US and Canada economies in the second half that sets the USD/CAD direction to year end.”

“The cross of the 21-day average on Monday leaves it just above the week’s close at 1.4015 adding a bit to resistance. The 100-day and 200-day averages trail the market and at 1.3670 and 1.3445 will aid support at those levels.”