USD/CAD penetrates 100-hour SMA support on broad-based dollar weakness

USD/CAD has breached key SMA support with the dollar losing ground across the board. 

The pair is currently trading near 1.3518, representing a 0.40% decline on the day, having breached the 100-hour SMA support of 1.13531 soon before press time. 

USD/CAD's losses could be associated with the broad-based sell-off in the US dollar set in motion by Federal Reserve's decision to purchase corporate bonds. The central bank announced the additional support during Monday's American trading hours, following which stock markets picked up a bid, and the dollar turned lower against major currencies. 

The USD/CAD pair fell from 1.3686 to 1.3546 and has extended decline during Tuesday's Asian session. 

Some experts think the greenback is likely to take a beating over the long-run due to the US' worsening fiscal situation. "The U.S. economy has been afflicted with some significant macro imbalances for a long time, namely a very low domestic savings rate and a chronic current account deficit. the dollar is going to fall very, very sharply, possibly by 35%, over the next one or two years," Yale University's senior fellow Stephen Roach, told CNBC on Monday. 

In the short-run, however, the US dollar could surge against majors if the number of coronavirus cases begins to rise at a faster pace in the US, China, and other nations. Some US states and Beijing registered growth in the coronavirus cases over the weekend, stoking fears of the second wave of the outbreak. 

Apart from the virus scare, the focus would be on the gyrations in oil prices. West Texas Intermediate (WTI) crude rallied by over 2% on Monday, adding to the bullish pressure around the Canadian dollar. The black gold has rallied by nearly 80% so far this quarter. 

As for the next few hours, the pair could continue to lose altitude, courtesy of the risk reset in the equity markets, and the broad-based US dollar weakness. The futures on the S&P 500 have extended early gains and are currently trading 1.5% higher on the day. The pick up in the bullish momentum could be associated with the news that President Trump is planning to provide additional stimulus worth $1 trillion via infrastructure spending. 

Technical levels