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Has USD/CAD bottomed out?

Fawad Razaqzada Fawad Razaqzada 07/04/2021
Has USD/CAD bottomed out? Has USD/CAD bottomed out?
Has USD/CAD bottomed out? Fawad Razaqzada
As I mentioned yesterday, the US dollar could rise further in the next few months after a solid first quarter. But the dollar index has started the new quarter and month on the backfoot due mainly to a sizeable rebound for the euro, which gained ground as investors reduced their pessimistic forecasts about timing of the re-opening of the major economies. Bloomberg reported yesterday, citing a memo circulated to national delegations in Brussels, that the European Union’s executive arm says most member states will have sufficient vaccine supplies to immunize the majority of people by the end of June. If correct, this will be sooner than the markets had previously expected, meaning travel restrictions could be lifted ahead of the holiday seasons. Against the pound meanwhile, the US dollar has had a good few days with the cable also being undermined by the rebounding EUR/GBP exchange rate. The US dollar has also started to show signs of life against some commodity dollars recently and with crude oil struggling for direction, the Canadian dollar could be the next domino to fall. The focus will be on the FOMC minutes, due for release at 19:00 BST. But with several FOMC members having already spoken since the Fed’s last meeting, and as we have had a few solid data releases already, don’t expect too much reaction from the FOMC minutes.
 
Meanwhile, the Canadian dollar will be in focus as investors look ahead to Friday’s release of Canadian jobs report. After a forecast-beating 259,200 print the previous month, employment is expected to have risen by a more modest 90,000 in March. A weaker number could derail the rally which has been supported by rising oil prices and after the BOC effectively announced an end to its emergency stimulus measures. Still, regardless of the Canadian data, if the US dollar manages to rebound more profoundly given the vaccine rollout success there with the daily dose rate running above 3 million, the USD/CAD could rally anyway. US President Joe Biden has announced that every American adult would be eligible for a vaccine by April 19. This means that 3 quarters of the US population will be vaccinated by around July, if the current pace is maintained.
 
Now then, the USD/CAD has already broken its weekly bearish trend line, meaning it has potentially formed a low:

USD/CAD weeklySource: ThinkMarkets and TradingView.com

What we need to see next is for price to form a higher high, with the most recent high coming in at 1.2750ish:

USD/CAD daily
Source: ThinkMarkets and TradingView.com

In terms of support, the bulls will need to hold the breakout above 1.2590, otherwise a drop back towards 1.2500 could be on the cards.
Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice. ThinkMarkets will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.

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Meet our contributors
Fawad Razaqzada
×
Fawad Razaqzada
Market Analyst, London

Fawad is an experienced analyst and economist having been involved in the financial markets since 2010, producing market commentary and research for a number of global FX, CFD and Spread Betting brokerage firms. He leverages years of market knowledge to provide retail and professional traders worldwide with succinct fundamental & technical analysis. Fawad also offers trading education to help shorten the learning curves of developing traders.
 
His colleagues consider him an expert at reading price action on the charts. This together with his deep understanding of economics and fundamental analysis, and trading experience, puts him in a great position to forecast short term price movements. Fawad covers a wide range of markets, including FX, commodities, stock indices and cryptocurrencies and his comments are regularly quoted by the leading financial publications such as Reuters and Market Watch. In addition to ThinkMarkets, Fawad also provides analysis and premium trade signals on his own website at TradingCandles.com.
 
 

Carl Capolingua
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Carl Capolingua
Market Analyst, Melbourne

Carl has over 20 years' experience in financial markets and has held senior analyst roles at a number of financial institutions. Specialising in Australian and US stock markets in particular, Carl uses a top-down approach to assess the global macro picture before using both technical and fundamental techniques to select stocks. He regularly appears as an expert commentator on a number of media outlets throughout the Asia-Pacific region.
 
 
 

Fawad Razaqzada
Fawad Razaqzada
Fawad is an experienced analyst and economist having been involved in the financial markets since 2010, producing market commentary and research for a number of global FX, CFD and Spread Betting brokerage firms.
Carl Capolingua
Carl Capolingua
Carl has over 20 years' experience in financial markets and has held senior analyst roles at a number of financial institutions.

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Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice. ThinkMarkets will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.
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