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USD/CAD is consolidating after breaking the five-month down channel. Joseph Trevisani, an analyst at FXStreet, is awaiting a catalyst for an upmove as any run higher can be expected to bolstered by stop buying.  

Key quotes

“The inconclusive break of the pandemic downtrend presents an undecided view forward in the USD/CAD. There is as yet not enough evidence that the US economy has recovered from the lockdown debacle to generate a strong return in the dollar. The Fed’s evident caution reinforces that wariness.”

“That a reversal of a five-month trend would be blocked by the relatively weak resistance at 1.3270 is another indication of market uncertainty. The USD/CAD has returned to its pre-pandemic range which is perhaps not surprising after the egregious but essentially artificial excitation of the virus.”

“A major point for the US economy remains the labor market which continues to shed nearly one million job a week despite the strong return of payroll positions in the NFP report.  Were these figures claims to drop the chances for a concerted gain in the USD/CAD would rise substantially.” 

“The USD/CAD reached above 1.3600 in December 2018 and traded above 1.3400 for much of the second quarter of 2019.  Those ranges would be the natural destination for any move higher. Profit-taking purchases would likely begin north of 1.3350 where the USD/CAD bounced in early June.”

“For the moment the USD/CAD is waiting for catalyst but with profit-taking buying lurking in the wings it would not take much improvement in US statistics to send the probes higher.”