- USD/CAD witnessed some long-unwinding trade from multi-year tops on Thursday.
- A modest recovery in oil underpinned the loonie and prompted some profit-taking.
- The global rush to hoard cash benefitted the USD and should help limit the downside.
The USD/CAD pair rallied over 100 pips in the last hour, albeit struggled to build on the momentum further beyond the 1.4600 round-figure mark.
Following the overnight pullback and a subsequent dip to the 1.4425 region during the Asian session on Thursday, the pair managed to regain positive traction and refreshed multi-year tops.
However, a modest recovery in crude oil prices underpinned demand for the commodity-linked currency – the loonie and prompted some intraday profit-taking amid extremely overbought conditions.
The pair continued with its struggle to find acceptance above mid-146.00s and witnessed a dramatic turnaround, albeit a sustained buying surrounding the US dollar helped limit deeper losses.
Despite coordinated efforts by central banks across the world, the recent brutal selloff in equity markets and a sudden spike in the volatility raised market concerns about tightening liquidity conditions.
Adding to this, worries over the economic fallout from the coronavirus pandemic forced investors to scramble for cash and continued boosting the greenback’s status as the global reserve currency.
This remained supportive of the pair’s positive tone for the fourth-consecutive session on Thursday and support prospects for a move back towards January 2016 swing highs, around the 1.4690 region.
Technical levels to watch
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