CANADIAN DOLLAR TALKING POINTS
USD/CAD attempts to retrace the decrease after the update to Canada's Employment report in a bid to maintain the opening range for April, but absence of effort to push back above the 50-Day SMA (1.2611) can lead to a further decrease in the exchange rate like the cost action seen earlier this season.
USD/CAD appears to be on track to test the monthly low (1.2502) as it extends the series of lower highs and lows in the preceding week, and also the exchange rate may continue to return the rebound from the March low (1.2365) if it fails to retain the opening range for April.
It remains to be seen if the Bank of Canada's (BoC) Business Outlook Survey will influence USD/CAD since the"Governing Council judges that the recovery continues to require exceptional monetary policy support," and the central bank could endorse a wait-and-see approach throughout the first half of 2021 as officials pledge to"provide the appropriate amount of fiscal policy stimulus to support the restoration and achieve the inflation goal."
On the other hand, the 303.1K expansion in job can encourage the BoC to gradually adjust the forward advice as the ongoing recovery in the labor market instills a better outlook for expansion, and Governor Tiff Macklem and Co. may sound less dovish at another meeting on April 21 because the central bank is slated to upgrade the Monetary Policy Report (MPR).
Until then, USD/CAD can continue to monitor the March range as it fights to push back above the 50-Day SMA (1.2611), but the tilt in retail sentiment looks poised to persist as dealers have been net-long the pair as May 2020.
The IG Client Sentiment report shows 60.35% of dealers are net-long USD/CAD, together with the ratio of traders long to brief standing at 1.52 to 1.
The amount of traders net-long is 0.13percent lower than yesterday and 16.08% higher from a week, while the number of dealers net-short is 24.58% higher than yesterday and 5.31% lower from previous week. The development in net-long position has fueled the crowding behaviour performed from 2020 as 57.13percent of traders were net-long USD/CAD during the previous week, although the decline in net-short interest could be a function of profit taking behaviour as the exchange rate efforts to retrace the decline following the upgrade to Canada's Employment report.
That said, lack of momentum to push above the 50-Day SMA (1.2611) may result in a further decrease in USD/CAD like the cost action seen earlier this season, along with the exchange rate could continue to return the rebound in the March reduced (1.2365) in case it slips the opening array for April.
Source: Trading View
The wider outlook for USD/CAD remains tilted to the downside as it deals to a fresh annual low (1.2365) in March, together with both the 50-Day (1.2611) and 200-Day (1.2982) SMA's still monitoring the negative incline carried over from the previous calendar year.
The Fibonacci overlap around 1.2620 (50% retracement) into 1.2650 (78.6% growth ) seems to be acting as resistance as it lines up with all the 50-Day (1.2611), and USD/CAD may continue to signify the price action from before this season as it struggles to push above the moving average.
The Relative Strength Index (RSI) highlights a similar dynamic as the index consistently retains below 60, with the oscillator indicating the bullish momentum will continue to abate over the coming times as it fails to conserve the upward trend carried over from the last month.
In turn, USD/CAD will sabotage the opening range for April since it drops back to the 1.2510 (78.6% retracement) to 1.2520 (23.6% expansion) area, with fresh monthly lows at the exchange rate bringing the 1.2440 (23.6% growth ) region on the radar.
Second area of interest comes in around 1.2360 (100% growth ) to 1.2390 (38.2% growth ), which lines up with the March non (1.2365), followed by the overlap around 1.2250 (50% retracement) into 1.2280 (50% growth ).
