USD/CAD retreats from monthly highs, turns flat below 1.3150

WTI remains on track to close in red for fourth straight day.
US Dollar Index climbs above 97.70 on Thursday.
Coming up on Friday: Retail Sales data from Canada and PMI data from US.

Eren Sengezer FXStreet

The USD/CAD pair gained nearly 70 pips on Wednesday as falling crude oil prices and the Bank of Canada's dovish policy outlook weighed on the loonie. Although the pair extended its rally and touched its highest level in a month at 1.3172 on Thursday, it retraced its daily upside and turned flat near the 1.3140 mark during the American session. Nevertheless, the latest pullback seems to be a technical correction as there no fundamental developments that could ramp up the demand for the CAD.

BoC rate cut odds hurt CAD

Commenting on the BoC's policy statement and Governor Poloz's remarks, “with the economy no longer seen as operating close to full capacity, the bank's tolerance for sub-trend growth is likely to be limited," said Josh Nye, Senior Economist at RBC Economics. "Today's statement makes us more comfortable with our call for a rate cut in April, and market odds of a move by mid-year are now slightly above 50%.”

Meanwhile, concerns over coronavirus spreading and becoming a global issue weighed on crude oil prices and dragged the barrel of West Texas Intermediate (WTI) to its lowest level in more than two months below the $55 mark to make it difficult for the commodity-sensitive loonie to stay resilient against the greenback.

On the other hand, the greenback gathered strength amid the heavy selling pressure surrounding its risk-sensitive European counterparts. The US Dollar Index broke above its weekly range and touched its highest level since Christmas Eve at 97.82.

On Friday, Retail Sales data from Canada and the IHS Markit's Manufacturing and Services PMI data from the US will be looked upon for fresh impetus.

Technical levels to consider

USD/CAD

Overview
Today last price	1.3137
Today Daily Change	-0.0003
Today Daily Change %	-0.02
Today daily open	1.314

Trends
Daily SMA20	1.3044
Daily SMA50	1.3151
Daily SMA100	1.318
Daily SMA200	1.3236

Levels
Previous Daily High	1.3154
Previous Daily Low	1.3036
Previous Weekly High	1.3081
Previous Weekly Low	1.3031
Previous Monthly High	1.3322
Previous Monthly Low	1.2951
Daily Fibonacci 38.2%	1.3109
Daily Fibonacci 61.8%	1.3081
Daily Pivot Point S1	1.3066
Daily Pivot Point S2	1.2992
Daily Pivot Point S3	1.2948
Daily Pivot Point R1	1.3184
Daily Pivot Point R2	1.3228
Daily Pivot Point R3	1.3302

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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