- The US Dollar stages a recovery on risk aversion spurred by the China Covid-19 crisis.
- USD/CAD bounced off weekly lows around 1.3300 and tested the 1.3400 mark.
- USD/CAD Price Analysis: The head-and-shoulders chart pattern remains intact.
The US Dollar (USD) stages a recovery against the Canadian Dollar (CAD) amid a subdued trading session sparked by thin liquidity conditions caused by the observance of the US Thanksgiving holiday. However, China’s Covid-19 cases jumping above 30,000 spurring a risk-off impulse, and US Treasury yields rising, underpinned the USD. At the time of writing, the USD/CAD is trading at 1.3376
USD/CAD Price Analysis: Technical outlook
Delving into the USD/CAD daily chart, the major erased Thursday’s losses, though it faltered to crack the 1.3400 figure after reaching a daily high of 1.3398. Although the US Dollar is buoyant, traders should know that the head-and-shoulders chart pattern is still in play. However, the USD/CAD needs to tumble below 1.3300 and the 100-day Exponential Moving Average (EMA) at 1.3268 to exacerbate a fall toward the head-and-shoulders chart pattern. Otherwise, the USD/CAD might jump above the 1.3500 neckline and invalidate the pattern.
As an alternate scenario, the USD/CAD first resistance would be the 1.3400 figure. A breach of the latter will send the USD/CAD climbing toward the confluence of the head-and-shoulders neckline and the 1.3500 psychological level, followed by the 50-day Exponential Moving Average (EMA) at 1.3566.