The Canadian dollar remains around early-2019 lows despite the downside momentum has slowed somewhat these days. USDCAD was rejected from the high of 1.4664 last week and has settled around 1.45 since then. Interestingly, the pair stays elevated even as the greenback dipped across the board on Tuesday, after the Federal Reserve announced a massive stimulus package.
Also, the pair remains afloat despite a bounce in oil prices along with other risky assets. Brent crude jumped above the $30 handle but was stopped by $31 during the recent trading. It is worth noting that the current relief rally is looking unsustainable anyway, as demand concerns continue to weigh on market sentiment amid the ongoing coronavirus outbreak. As a result, the Canadian currency may fail to receive any decent support from the oil market in the short- and medium-term.
After a brief slide below 1.44 amid USD supply, the pair has regained some ground and turned mildly positive on the day. In the short term, the upside potential looks limited so far but the prices may resume the ascent as soon as market reaction to the Fed’s unprecedented measures is over, as the Canadian currency remains fundamentally weak. In a wider picture, the dollar may further capitalize on its status as the global reserve currency amid the mounting concerns over the economic fallout from the coronavirus outbreak globally.
Meanwhile, from the technical point of view, the pair may start a more pronounced bearish correction from the recent highs, as the dollar looks overbought at the current levels. But to do this, the CAD needs to see further sustainable gains on oil prices along with a more pronounced recovery in risky assets. If the prices fail to cling to the current levels around 1.45, the next support zone is expected at 1.4325. once below, the greenback will target 1.42. On the upside, the immediate resistance arrives at 1.4560 and then around the above-mentioned more than one-year highs around 1.4660.