USD/CAD Daily Forecast – Volatile Trading Action Tests Both Support And Resistance Levels

U.S. President Donald Trump Suggests That Phase 4 Coronavirus Aid Package Should Include Infrastructure Bill Worth $2 Trillion

USD/CAD continues to experience major volatility. The pair managed to settle above the resistance level at 1.4150, which opened the path to the test of the resistance level at 1.4330.

However, a surprisingly good release of the Chicago PMI for March (47.8 vs consensus of 40) led to a decline of the U.S. dollar against a broad basket of currencies. The U.S. Dollar Index, which has previously tried to gain ground above the 100 level, has corrected closer to 99.

Another help for the Canadian dollar came from the oil front as oil gained ground on hopes about possible U.S. – Russia production cut talks. I remain skeptical that any such deal is possible in the near term, but the momentum upside in oil is certainly providing support for the Canadian currency.

Meanwhile, the U.S., which has just passed the $2 trillion coronavirus aid package, is already looking at the fourth part of the economic aid.

U.S. President Donald Trump has recently twitted that it was time to use the zero interest rates to get the long-awaited infrastructure bill and suggested that it could total $2 trillion.

Any additional coronavirus aid package will lead to more money-printing and is theoretically bearish for the U.S. dollar. However, the markets remain shocked by the current crisis, so the U.S. dollar could maintain its position as a safe haven asset of last resort.

Technical Analysis

USD/CAD had a volatile trading session and confirmed all major levels. First, the ability to stay above the 1.4150 level has led to the test of the major resistance at 1.4330.

This resistance level remained intact and serves as a major wall for USD/CAD. Clearly, the pair will need significant catalysts to get above 1.4330. One such potential catalyst is an additional collapse of oil prices, but it remains to be seen whether oil could drop even more despite the current low levels.

On the support side, USD/CAD should get increased buyer interest near the 20 EMA at 1.4050. If this level does not hold, the pair could head towards the next support level at 1.3925.

This article was originally posted on FX Empire

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