Crude oil is still deep in the red, which could mean more risk-off flows and downside for the positively correlated Canadian dollar.
I’ve already shared breakout and pullback setups on USD/CAD lately, so let’s look at a different Loonie pair this time.
But first, let’s check how the major pairs are faring so far:
Currency Snapshot
Fresh Market Headlines & Economic Data:
- U.S. President Trump to suspend immigration for 60 days
- U.S. Senate passes $500B deal for small business COVID-19 relief
- OPEC ministers fail to reach agreement on how to address oil crash
- CME to list oil options at a negative strike price
- Australia’s March retail sales jump 8.2% on account of panic buying
- CDC Chief: Next COVID-19 wave may be worse
- Asian shares tumble after crude oil fails to sustain bounce
Upcoming Potential Catalysts on the Economic Calendar:
- U.K. CPI at 7:00 am GMT
What to Watch: CAD/JPY
After the unprecedented oil price crash to subzero levels earlier this week, the commodity staged a feeble recovery and is still trading at record lows.
ICYMI, here’s the lowdown on negative crude oil prices!
OPEC ministers had an impromptu conference call to discuss how to deal with the mess, but the cartel members were unable to come up with an agreement. This likely means more downside for oil, possibly dragging the Canadian dollar down with it.There’s not much in the way of top-tier catalysts in the upcoming session, so market watchers could stay fixated on falling crude oil prices and risk aversion.
In that case, the safe-haven yen might be poised to enjoy more gains, possibly leading to a continuation of the selloff on CAD/JPY.
Price is already testing the 38.2% Fib at the mid-channel area of interest, which might be enough to keep gains in check. A larger correction could last until the 61.8% Fib closer to the descending channel resistance and the 76.50 minor psychological mark.
Technical indicators are hinting that the downtrend is likely to carry on, as the 100 SMA is below the 200 SMA and stochastic is turning lower without reaching the overbought zone.
If you can’t decide between a market or limit entry, scaling in might also be a good option. Just don’t forget to check the average USD/CAD volatility when setting exit levels!
