USD/CAD: Loonie to surrender to dollar's strength as the price of WTI falls

The modest rebound to Friday's close at 1.2577 has brought the USD/CAD pair to the upper border of the descending channel formation and just below the important resistance at 1.2600-1.2620. The catalyst of the minor reversal since March 18 has not been technical but fundamental, the price of WTI. But as that support has weakened in the last several weeks, FXStreet’s Analyst Joseph Trevisani foresees a rise in USD/CAD.

Key quotes

“The USD/CAD has been able to largely resist the general currency trend of a higher US dollar this year because of the strength of commodity prices and their relevance for the Canadian economy. If that support wanes, then the USD/CAD can be expected to join the rest of the market in celebrating the greenback.”

““If WTI drops below $60 and and especially if it maintains below $58, USD/CAD should surmount resistance at 1.2600 and break free of the formation that has controlled trading for more than a year.”

“The placement of the USD/CAD at the verge of a channel break will, if the pair can sustain movement above 1.2620, likely encounter stop-loss buying. There is a great deal of short USD/CAD profit in the descent from 1.4500 that is waiting for an excuse to be converted into revenue.”

“The 21-day moving average (MV) at 1.2569, crossed on Tuesday and closing support since is weak but meaningful in an undecided market. The 100-day MV at 1.2755 and the 200-day MV at 1.3029 will be notable resistance when encountered.”