Corona Virus
Stay Safe, FollowGuidance
Fetching Location Data…
Vladimir Zernov

Risk-Off Mode Helps U.S. Dollar

USD/CAD moved higher as riskier assets experienced sell-off due to coronavirus-related worries. Three countries – U.S., Italy and Spain – have more than 100,000 cases each, and the U.S. is close to 200,000 cases.

Know where USD/CAD is headed? Take advantage now with 

75% of retail CFD investors lose money

Recently, German Chancellor Angela Merkel indicated that social distancing measures will be in place until April 19, 2020, and it looks like most developed economies will spend the full month of April under lockdowns of various severity.

In such environment, investors and traders turn to U.S. dollar as the safe haven asset of last resort, and the U.S. Dollar Index has tried to breach the psychologically important 100 mark today.

Both U.S. and Canada reported Manufacturing PMI numbers for March. Not surprisingly, both reports showed contraction of manufacturing activity. Investors should expect that Manufacturing PMI for April will look even worse given the current virus containment measures.

The key question of the recent days was whether the U.S. dollar would maintain its status of the safe haven asset of last resort as the coronavirus situation in the U.S. continued to deteriorate.

At this point, this status is confirmed, and the U.S. dollar is gaining ground against a broad basket of currencies at a time when the market is worried about the impact of coronavirus-related measures on the economy.

Currently, this is a bullish factor for USD/CAD which continues to receive buyer support following the downside move of the past week.


Technical Analysis

USD/CAD received material support near the 20 EMA at 1.4070. This support level is located at the lower end of the newly formed upside channel. If this support is breached, USD/CAD may try to move towards the 50 EMA at 1.3750.

However, it will first have to go through the next support level at 1.3925, which could be a problem given the fact that markets are returning to risk-off mode amidst worsening coronavirus data.

On the upside, the previous resistance level at 1.4150 has ceased to exist. The pair has moved through it like knife through butter for too many times for it to stay relevant.

The next major resistance level is located at 1.4330. If this level is breached, USD/CAD will likely head towards 1.4500.

Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Trade With A Regulated Broker

  • Your capital is at risk
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.