USD/CAD to continue trading in the 1.35-1.36 range

The USD/CAD continues its month long bout of range trading with the 4-week movement limited to 1.35-1.37 and the July action to an even narrower band of 1.35-1.36. Joseph Trevisani, an analyst at FXStreet, expects the loonie to stay within the range until the market clears up the impact of the current coronavirus outbreak.

Key quotes

“As the disease normally takes several weeks to produce a fatality, the next two weeks should begin to provide conclusive evidence if the current outbreak will strain the health care systems in the various states affected. If it does governors may be forced to order a second round of business shutdowns with all the accompanying economic damage. If it does not then the recovery should continue apace.”

“The constricted range trading of the last month will likely continue for a few more weeks as markets assess the economic danger from the current Covid outbreak.”

“The relative strength index is just below neutral as the USD/CAD is near the mid-point of its one month range. The moving averages have divided with the 100-day far above the market at 1.3833, the 21-day at the market at 1.3585 and the 200-day at 1.3505 offering additional support.”