Technical Analytics Report

Morning Market Review 22 March 2021

USD/CAD: Fundamental Analysis Report 22 March 2021

 Current trend: CAD continues to decline

The weakening of CAD, which began last week, allowed the USD/CAD pair to reach the resistance level of 1.2510. The trading instrument is strengthening amid falling prices for crude oil (WTI quotes lost 6.8% last week). The USD index, in turn, rallied against the basket of major currencies and closed near 92.000.

However, the growth of the USD/CAD pair is nothing more than a correction to a long-term downtrend. The global economy is recovering, which increases demand for oil in the long term, while OPEC is trying to maintain production levels.

 In turn, the Canadian unemployment rate fell by 1.2% to 8.2% in February, well above the consensus forecast. The level of economic activity remained at 64.7%. Unemployment is declining, despite the fact that most part of Canada is still under severe restrictions due to COVID-19. In addition, vaccination in the country is proceeding at a rather slow pace. So far, only 7.4% of the Canadian population received the first dose of the drug, but as the restrictions are lifted, an increase in the number of vaccinated can be expected, which will mean a faster economic recovery and a strengthening of the national currency.

 Support and Resistance

Buyers reached the resistance level of 1.2510 last week. The breakout of this level will allow the upward correction to continue with the target at the trend border at 1.2730. Holding the level of 1.2510 will lead to a breakdown of the support at 1.2430 and a further fall to 1.2264.

 The mid-term trend is downward. At the moment, market participants are trying to break through the key resistance in the area of 1.2552–1.2535. If the price consolidates above these levels, the trend will change. If the resistance is kept, one can expect a fall with the target in the area of 1.2400–1.2383.

 Resistance levels: 1.2510, 1.2730, 1.2845.

Support levels: 1.2430, 1.2264, 1.2119.

 Trading tips

·         Short positions may be opened below 1.2430 with target at 1.2264 and stop-loss at 1.2473. Implementation period: 5-7 days.

·         Long positions may be opened above 1.2560 with target at 1.2730 and stop-loss at 1.2500.

 Scenario

Timeframe: Weekly

Recommendation: Sell Stop

Entry Point: 1.2425

Take Profit: 1.2264

Stop Loss: 1.2473

Key Levels: 1.2119, 1.2264, 1.2430, 1.2510, 1.2730, 1.2845

 Alternative Scenario

Timeframe: Weekly

Recommendation: Buy Stop

Entry Point: 1.2565

Take Profit: 1.2730

Stop Loss: 1.2500

Key Levels: 1.2119, 1.2264, 1.2430, 1.2510, 1.2730, 1.2845


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