USD/CAD bounces off monthly lows amid broad US dollar strength

USD/CAD takes the bids to 1.3235 during the pre-European session on Thursday. The pair recently bounced off the monthly lows as trade sentiment worsened following fresh coronavirus risk. The same pull Canada’s main export, crude oil, from the highest in four weeks.

A new methodology in counting the infected cases of coronavirus surprised market players during the Asian session. However, downbeat comments from the International Monetary Fund’s (IMF) Managing Director Kristalina Georgieva and rating giant S&P weighed on risk-tone off-late.

While portraying the risk-off, the US 10-year treasury yields drop two basis points to 1.55% whereas stocks in Asia have started scaling back the early-day gains.

In addition to the risk-off, the US dollar might also have been cheering a rate cut from the People’s Bank of China (PBOC) and downbeat Unemployment Rate from Australia.

Moving on, traders will observe today’s economic calendar comprising the Canadian New Housing Price Index and ADP Employment Change as well as the Philadelphia Fed Manufacturing Survey from the US. Additionally, headlines from China will be the key risk driver and hence are worth following.

Technical Analysis

In addition to 200-day SMA, around 1.3217, a confluence of 100-day SMA and an upward sloping trend line from January 07, close to 1.3180, restricts the pair’s near-term declines. However, the pair’s immediate upside is capped by 21-day SMA and an eight-day-old falling trend line, respectively, around 1.3240 and 1.3260.