Today’s price action has been quite mixed. Stock indices managed to rise in Europe, but there has been a sharp reversal in risk appetite for other assets including FX and
crude oil, which took a battering with a 4% drop. FX traders moved into the safe-haven Japanese yen and US dollar, and out of growth sensitive commodity dollars. The USD/CAD rose for the fourth day as the drop in oil weighed on the CAD.
A surge in virus cases in mainland Europe, where the rollout of vaccines has been painfully slow, has cast doubt on resumption of travel in the region. Among other things, this is hurting demand projections for crude oil and holidays. If oil extends losses, the USD/CAD could be in for a big rebound.
But the USD/CAD will need to break above THIS bearish trend line and resistance around 1.2590 which was being tested today, if it has a chance for a more meaningful rally:
Source: ThinkMarkets and TradingView.com
A move north of the bearish trend line could pave the way for fresh technical selling above it in the days ahead. However, if the trend line holds, then the bulls will need to proceed with a bit of care, for the longer-term trend is still technically bullish.
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