USD/CAD: the Canadian dollar is strengthening 22 February 2021, 09:48

USD/CAD: the Canadian dollar is strengthening

22 February 2021, 09:48

Scenario
Timeframe	Weekly
Recommendation	SELL LIMIT
Entry Point	1.2640
Take Profit	1.2500
Stop Loss	1.2710
Key Levels	1.2288, 1.2500, 1.2550, 1.2640, 1.2750, 1.2823

Alternative scenario
Recommendation	BUY STOP
Entry Point	1.2755
Take Profit	1.2950
Stop Loss	1.2650
Key Levels	1.2288, 1.2500, 1.2550, 1.2640, 1.2750, 1.2823

Current trend

The USD/CAD pair is strengthening amid rising oil prices and a weakening of the US dollar.

For a long time, Canada lagged behind other G10 countries in terms of vaccination rates but thanks to new supplies of vaccines, Canada's recovery program is accelerating. On January 19, there were 1.22 vaccinated per 100 people, and on February 19 this figure reached the level of 3.72. The index is growing slower than in Europe or the USA but the positive dynamics are obvious. The second factor strengthening the country's economy is the growth of the energy market. Last month, there was a significant increase in oil prices, and the cost of WTI Crude Oil reached $62 per barrel. The energy sector accounts for 11% of Canada's GDP, and the flow of funds into the national currency seems logical.

At the end of last week, the USD Index fell to 90.34 in response to ambiguous US statistics. Existing Home Sales rose to 6.69 million from 6.65 million earlier. Building Permits for January amounted to 1.881 million against 1.704 million. However, Initial Jobless Claims amounted to 861K against the forecast of 765K, and the previous figure was revised from 793K to 848K.

Support and resistance

The price broke through the support level of 1.2640, and the next target will be the level of 1.2550. Its breakdown allows further decline to the level of 1.2288. The RSI indicator is in the neutral zone, which allows opening short positions.

In the medium term, the rate reversed downward, breaking the support zone of 1.2701–1.2683 last week. This week, the target “bearish” zone is range 2 (1.2526–1.2509). The trend border is shifting to the levels of 1.2774–1.2756.

Resistance levels: 1.2640, 1.2750, 1.2823.

Support levels: 1.2550, 1.2500, 1.2288.

Trading tips

Short positions may be opened from 1.2640 with the target at 1.2500 and stop loss 1.2710. Implementation period: 5–7 days.

Long positions may be opened above 1.2750 with the target at 1.2950 and stop loss 1.2650.