USD/CAD Charge to Eye March Low on Break of April Opening Vary

Canadian Greenback Speaking Factors

USD/CAD makes an attempt to retrace the decline following the replace to Canada’s Employment report in an effort to retain the opening vary for April, however lack of momentum to push again above the 50-Day SMA (1.2611) might result in an additional decline within the alternate charge like the value motion seen earlier this 12 months.

USD/CAD Charge to Eye March Low on Break of April Opening Vary

USD/CAD seems to be on monitor to check the month-to-month low (1.2502) because it extends the collection of decrease highs and lows from the earlier week, and the alternate charge might proceed to provide again the rebound from the March low (1.2365) if it fails to retain the opening vary for April.

Supply: BoC

It stays to be seen if the Financial institution of Canada’s (BoC) Enterprise Outlook Survey will affect USD/CAD because the “Governing Council judges that the restoration continues to require extraordinary financial coverage help,” and the central financial institution might endorse a wait-and-see method all through the primary half of 2021 as officers pledge to “present the suitable diploma of financial coverage stimulus to help the restoration and obtain the inflation goal.”

Nonetheless, the 303.1K growth in employment might encourage the BoC to regularly modify the ahead steering as the continuing restoration within the labor market instills an improved outlook for development, and Governor Tiff Macklem and Co. might sound much less dovish on the subsequent assembly on April 21 because the central financial institution is slated to replace the Financial Coverage Report (MPR).

Till then, USD/CAD might proceed to trace the March vary because it struggles to push again above the 50-Day SMA (1.2611), however the tilt in retail sentiment seems to be poised to persist as merchants have been net-long the pair since Might 2020.

The IG Consumer Sentiment report exhibits 60.35% of merchants are presently net-long USD/CAD, with the ratio of merchants lengthy to brief standing at 1.52 to 1.

The variety of merchants net-long is 0.13% decrease than yesterday and 16.08% greater from final week, whereas the variety of merchants net-short is 24.58% greater than yesterday and 5.31% decrease from final week. The rise in net-long place has fueled the crowding habits carried over from 2020 as 57.13% of merchants have been net-long USD/CAD throughout the earlier week, whereas the decline in net-short curiosity could possibly be a perform of revenue taking habits because the alternate charge makes an attempt to retrace the decline following the replace to Canada’s Employment report.

With that mentioned, lack of momentum to push again above the 50-Day SMA (1.2611) might result in an additional decline in USD/CAD just like the value motion seen earlier this 12 months, and the alternate charge might proceed to provide again the rebound from the March low (1.2365) if it snaps the opening vary for April.

USD/CAD Charge Every day Chart

Supply: Buying and selling View

• The broader outlook for USD/CAD stays tilted to the draw back because it trades to a contemporary yearly low (1.2365) in March, with each the 50-Day (1.2611) and 200-Day (1.2982) SMA’s nonetheless monitoring the detrimental slope carried over from the earlier 12 months.
• The Fibonacci overlap round 1.2620 (50% retracement) to 1.2650 (78.6% growth) seems to be appearing as resistance because it traces up with the 50-Day (1.2611), and USD/CAD might proceed to mirror the value motion from earlier this 12 months because it struggles to push above the shifting common.
• The Relative Power Index (RSI) highlights an identical dynamic because the indicator persistently holds beneath 60, with the oscillator indicating that the bullish momentum might proceed to abate over the approaching days because it fails to protect the upward development carried over from the earlier month.
• In flip, USD/CAD might threaten the opening vary for April because it falls again in direction of the 1.2510 (78.6% retracement) to 1.2520 (23.6% growth) area, with contemporary month-to-month lows within the alternate charge bringing the 1.2440 (23.6% growth) area on the radar.
• Subsequent space of curiosity is available in round 1.2360 (100% growth) to 1.2390 (38.2% growth), which traces up with the March low (1.2365), adopted by the overlap round 1.2250 (50% retracement) to 1.2280 (50% growth).

— Written by David Tune, Forex Strategist

Observe me on Twitter at @DavidJSong