USD/CAD: Pivotal resistance level at 1.2926-1.299 – CitiBank
|Analysts at Citibank expect a continued global economic recovery, with a weak dollar, meaning that cyclically correlated/high beta FX like the Canadian dollar will continue to enjoy gains against the US dollar. They see USD/CAD at 1.25 in a three month period and at 1.22 in six to twelve months.
Key Quotes:
“A rapidly strengthening labour markets means that 80% of pre-COVID jobs were regained through November, compared to about 65% for the comparable metric in the US. Citi Economics believes “that stronger growth projections will allow for a removal of accommodation at the April 2021 meeting.” We’d also note here that the BoC has already paused some of their easing measures. Typically a mix of loose fiscal and tight MoPo indicates currency appreciation.”
“USDCAD has been moving higher ever since it bottomed out slightly below the 76.4% retracement level at 1.2677. The pair faces a pivotal resistance level at 1.2926-1.2994, which consists of the 55day MA coming together with the Dec 2019 and Sept and Nov 2020 lows, and a falling trendline. Support may find at 1.2528 and 1.2630.”
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