- USD/CAD remains under pressure for the third consecutive day.
- Recovery in oil prices, broad US dollar weakness weigh on the pair.
- Trading sentiment remains mixed ahead of the key data/events.
USD/CAD drops further below 1.4000, currently near 1.3950, down 0.33% on a day, during the early Wednesday’s trading. The pair nears the two-week low flashed the previous day amid broad US dollar weakness and recovery moves of the oil prices.
While the broad US dollar weakness keeps the Loonie sellers hopeful, the recent recovery in oil, Canada’s main export, exert additional downside pressure on the pair. The WTI June futures on NYMEX extend recovery moves from $10 to $14.00 by the press time.
The greenback declines could be attributed to the downbeat US data as well as uncertainty surrounding when the US economy will re-open after the coronavirus (COVID-19) crisis. However, US President Donald Trump keeps pushing for the early restart while rejuvenating the US-China tussle by alleging the dragon nation for the spread of the deadly virus.
It’s worth mentioning that the market’s risk-tone remains mixed during the pre-FOMC/US GDP period, as always. That said, the US 10-year Treasury yields remain mildly positive near 0.62% with stocks in Asia-Pacific struggling between gains and losses.
Moving on, the preliminary readings of the US Q1 GDP and monetary policy meeting by the Federal Reserve will be the key to watch, together with the oil price moves and updates concerning the US-China tussle as well as virus news. The US Q1 GDP is expected to slump to -4.0% versus +2.1% prior while the FOMC is less likely to alter the present monetary policy but a dovish tone of Chairman Jerome Powell can’t be ruled out.
Considering the pair’s sustained break of the seven-week-old rising trend line, at 1.4005 now, bears are likely aiming for a 50-day SMA level near 1.3900. Meanwhile, an upside clearance above 1.4005 will have 21-day SMA, close to 1.4060, as an additional resistance to watch.