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  • Loonie fails to recover versus US dollar and extends losses. 
  • USD/CAD heads for the highest close since January 2016. 

The USD/CAD rose further during the American session on the back of a stronger US dollar and a decline in crude oil prices. It climbed to 1.4275, level last seen back in January 2016. 

WTI down 5%, Dow Jones up 4.80% 

Crude oil prices failed to recover and turned to the downside again, falling in New York below $27.00 and under last week lows, to the weakest since February 2016. The slide in crude oil prices weighed on the Loonie that was among the worst the performers of the American session. 

Another key drive is the rally of the US dollar. The DXY moved off highs, but is still up more than 1%. It is looking at the 2020 top. Just eight days ago, it was trading at the lowest since September 2018. Volatility and fear still reign, favoring the US dollar. 

In the US, the Trump administration announce stimulus measures and also the Federal Reserve launch more facility programs. Economic data from Canada and the US was ignored by market participants. 

More than 200 pips 

The USD/CAD is rising 250 pips on Tuesday. Technical indicators show overbought conditions but the chart does not present signs of a correction. After rising almost 900 pips in ten days a correction seems overdue but current times are exceptional so exaggerated moves are likely to continue. The next resistance area to the upside is seen around 1.4300.