USD/CAD Video 26.06.20.
Virus Fears Boost Demand For Safe Haven Assets
The number of new daily coronavirus cases in the U.S. is at all-time high, and the markets fear that the recent surge may force authorities to restore some of the virus containment measures.
This fear drives demand for safe haven assets like the U.S. dollar, and the U.S. Dollar Index, which measures the strength of the American currency against a broad basket of currencies, is trying to settle above the resistance level at 97.5.
If this attempt is successful, the U.S. dollar may gain additional upside momentum which would be bullish for USD/CAD.
The increase of Personal Spending was a bit softer than expected but still highlighted the strong recovery of consumer activity in May. However, this increase was not able to provide support for riskier assets today as traders focused their attention on virus data.
In addition, the U.S. Fed has told the banks to skip share buybacks in the third quarter and limit dividends to current levels, increasing fears that the road to full recovery would be a very long one.
USD/CAD gained significant upside momentum after it managed to get above the resistance at the 20 EMA and predictably met resistance at the 50 EMA at 1.3710.
Now, USD/CAD will have to settle above the 50 EMA to gain additional momentum and continue the upside move.
I’d note that USD/CAD had no pullbacks after it managed to rebound from the support level at 1.3500 so it will need additional catalysts to get straight through the resistance at the 50 EMA.
If this happens, USD/CAD will head towards the next resistance level at 1.3800.
On the support side, the nearest support for USD/CAD is located at the 20 EMA which is currently located at 1.3610. A move below the 20 EMA will open the way to the test of the strong support level at 1.3500.
For a look at all of today’s economic events, check out our economic calendar.