USD/CAD: the pair is under pressure 24 February 2021, 10:10

USD/CAD: the pair is under pressure

24 February 2021, 10:10

Scenario
Timeframe	Weekly
Recommendation	SELL STOP
Entry Point	1.2549
Take Profit	1.2300
Stop Loss	1.2600
Key Levels	1.2300, 1.2549, 1.2788, 1.3104

Alternative scenario
Recommendation	BUY STOP
Entry Point	1.2788
Take Profit	1.3104
Stop Loss	1.2700
Key Levels	1.2300, 1.2549, 1.2788, 1.3104

Current trend

The USD/CAD pair is showing a downtrend, trading at 1.2587. USD is declining along with the USD Index, which dropped to its January 2021 lows at 90 points. Analysts fear that a drop below this level could mean the beginning of prolonged stagnation.

During his speech in Congress yesterday, the Chair of the US Fed, Jerome Powell, noted that the economic recovery is going unevenly against the background of high unemployment and low inflation. Powell considers the problem of the labor market to be the main constraint that can significantly slow down economic growth in 2021.

In turn, CAD continues to trade uncertainly against the backdrop of a rather difficult situation with the COVID-19 pandemic in Canada, where the total number of cases exceeded 850K. Yesterday, Prime Minister Justin Trudeau announced new restrictive measures for people entering Canada. Now they will need to take the test right at the airport and go through a three-day quarantine at the hotel, paid by the arrivals themselves. Canadian authorities hope that after the introduction of such measures, the number of arrivals will noticeably decrease.

Support and resistance

The price continues to trade within the descending channel, being near the resistance line. Technical indicators have issued a sell signal. The fast Alligator indicator EMAs crossed the signal line from above, and the histogram of the AO oscillator is trading in the sales area.

Resistance levels: 1.2788, 1.3104.

Support levels: 1.2549, 1.2300.

Trading tips

If the asset continues declining and the price consolidates below 1.2549, short positions can be opened with the target at 1.2300. Stop-loss – 1.2600. Implementation time: 7 days and more.

If the asset reverses and continues growing and the price consolidates above 1.2788, long positions will be relevant with target at 1.3104. Stop-loss – 1.2700.