USD/CAD Price Forecast:
- USD/CAD could enjoy an extension higher as risk assets and crude oil crumble
- An initial barrier to further gains may reside around the 1.38 level and the pair’s 2017 high
- IG Client Sentiment Data reveals retail traders remain overwhelmingly short USD/CAD, a potential sign of further bullishness
Canadian Dollar Price Forecast: USD/CAD Ascent Slows at Resistance
USD/CAD experienced a significant gap higher on Monday as stocks and crude oil collapsed, and risk aversion raged. As a result, the pair extended beyond its recent consolidation range, a zone in which it traded for the better part of a year. As markets progress into the latter half of the week, USD/CAD has slowed its climb as it encounters resistance around the 1.38 mark.
USD/CAD Price Chart: Daily Time Frame (January 2016 – March 2020)
The level coincides with the pair’s 2017 peak and will likely pose notable resistance to a continuation higher. Should it fail, subsequent barriers are relatively sparse until the 1.4000 mark and a secondary boundary offered by the Fibonacci line at 1.4070. Together, the zone could look to stall a prolonged extension should risk aversion spike again or renewed crude oil weakness weigh on the Canadian Dollar.
On the other hand, the pair could enjoy support at the nearby 1.3590 band with initial support potentially resting at the 1.3686 Fibonacci level. Given the pair’s meteoric rise, consolidation may be required before a continuation higher can be pursued.
That being said, it may only be a matter of time until bullishness resumes as IG Client Sentiment Data reveals retail traders are net-short USD/CAD. To learn more on how to incorporate the data into your trading strategy, sign up for my webinar below. In the meantime, follow @PeterHanksFX on Twitter for updates.
--Written by Peter Hanks, Junior Analyst for DailyFX.com
Contact and follow Peter on Twitter @PeterHanksFX
