- USD/CAD is struggling to break the monthly resistance 1.41 level
- Oil made a considerable rebound after it dropped below zero
- Many events waiting for the Canadian Dollar next week
Monthly Time Frame:
With the beginning of the year, the greenback was showing power against the Canadian Dollar, by appreciating more than 13%. However, the Loonie has managed to put pressure on the US Dollar and push it lower, from 1.4650 to 1.3850 level since mid-March.
As the graph shows, the USD/CAD could not breach the 1.4100 level, which will be a substantial test for the Dollar in the next few weeks.
4-Hr Time Frame:
Looking at a shorter time frame, it is evident that the USD/CAD has entered a channel where it has been ranging since the end of March.
A break from the topside of this channel, it might lead to a bullish bias for the USD/CAD while a breakout from the downside of this pair might cause a huge drop giving the lead to the bears.
To predict what might happens for the USD/CAD, a look at the oil chart might help.
After reaching a price below zero, the oil made a huge pullback and went upward to the 19.70 level.
This level could be a test for the oil. In case it breaks and closes above it, we might see a rally in the oil prices.
On the other hand, if the oil is rejected from the 19.70 mark, a move downward might be seen.
How will this affect the Loonie?
Since Canada is one of the biggest exporters of oil, there is a positive correlation between oil prices and the Canadian Dollar.
A rally in the oil prices will lead to an appreciation of the Loonie, which might cause a depreciation of the USD/CAD.
The opposite is true in case the oil depreciates the Loonie will take a similar path, and the USD/CAD will move higher.
Next week several events will be waiting for the USD/CAD, including the unemployment reports.
A factor that we should consider is the reopening of some major countries which lead to a higher demand for oil prices, and this means an appreciation of the Loonie value.
A fight between the Greenback and the Canadian Dollar will be seen next week around the 1.4100 level.