USD/CAD to target 1.2400 on a break below 1.2470

The USD/CAD came to rest at the 1.2470 support on Friday, a level not visited since February 2018. The bias is lower because technical support is weak and downward momentum strong. Nonetheless, the loonie is vulnerable to a profit-taking rebound, particularly one based on a fundamental factor, interest rates or data, FXStreeet’s Analyst Joseph Trevisani reports. 

Key quotes

“The supposed advantage to the Canadian economy from commodity prices has yet to be established in the data and cannot be until second quarter information is issued. In the interim, the trend remains, slowing but intact.”

“First support at 1.2400 is the initial goal but the steep 1.5% drop this week makes the USD/CAD vulnerable to the profit-taking rebounds that have characterized its entire pandemic decline.”

“The first resistance at 1.2515 is weak, 1.2600 is strong.”

“The US Federal Reserve meeting on March 16 and 17 is the main event in the coming week. The slightest hint from Chairman Jerome Powell of tempering in the bond purchase program will send US rates and probably the USD/CAD higher.”

“There will be no policy developments but the first Projection Materials for the year are due. Any improvement in the GDP and unemployment estimates, which is likely, will confirm the positive US economic outlook. Likewise, US Retail Sales on Tuesday and Canadian on Friday will be important notices for their consumer sectors.”