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  • USD/CAD’s rebound from 1.4019 fails to breach 1.4100.
  • US dollar loses strength following downbeat US retail sales figures.
  • The pair remains limited below trendline resistance from March 31 high.

 

The US dollar’s rebound from 1.4019 lows earlier today has been rejected at 1.4100, and the USD/CAD has retreated to the mid-range of 1.4000. The dollar appreciated on risk aversion during the European trading session, to pullback at 1.4110, following a sharper than expected decline on US consumption figures.

US dollar strength falters after grim retail sales

The dollar bounced up at 1.4019 ahead of the European opening to appreciate, fuelled my risk aversion. Increasing concerns about the second wave of COVID-19 on the countries that have started easing restrictions and the escalating tensions between the US and China have fuelled safe-haven flows favouring the USD against its main peers.

The pair, however, has been unable to extend beyond 1.4110, hammered by the US retail sales data. Retail consumption plummetted by a record 16.4% in April, well beyond the 12.5% decline expected, adding further evidence of the damage of coronavirus on the US economy.

USD/CAD remains limited below trendline resistance

The daily chart shows the pair limited below the downward trending resistance line from March 31 highs at 1.4140, now at 1.4125 area. The pair should break above this line to increase bullish traction, targeting May 7 high at 1.4175 and March 21 high at 14265.

On the downside, below the 20-day SMA at 1.4055, the pair might target 1.3900 (May 11 low) and 1.3855 (April 30 low).