The downtrend is formally kept in the USD/CAD rate. At the same time, we note a consolidation since December, in the range of 1.2626-1.2906 CAD. The weakening of the USD against the CAD was not as rapid as against other key currencies. Perhaps this is due to the fact that both countries are neighboring to each other and dependent on each other.
The Canadian dollar, despite the ongoing rally in oil prices, does not find enough incentive to strengthen further against the USD, although this week, macroeconomic reports in Canada supported the CAD and the rates shifted down to the support line, testing its border. Meanwhile, oil prices continue rising under the influence of reduced oil reserves and oil extraction in the United States due to adverse weather conditions. It is difficult to say how long the oil rally will last, although most likely the highs have not yet been reached, though we're getting close. Therefore, the Canadian dollar may add a little more to the price. On the other hand, the CAD is already trading at 2017 levels. This suggests that a further development of the downtrend is unlikely to happen. At the end of 2020, the Canadian economy shrank by 5.4%, while the US - by 3.5%. Therefore, it will be easier for the US economy to recover from the pandemic.
Most technical analysis indicators are multidirectional. We believe that the deals to Buy will be more promising in the short term, and the deals to Sell will be more promising in the long term. We also predict a continuation of the flat trend in the near future or a reversal of the trend. The entry points to the market may also be the levels of 1.2626 and 1.2906.
