USD/CAD Plunges Below 1.3200 Amid US Dollar Recovery

The USD/CAD pair experiences a sharp decline, breaking below 1.3200, in the face of a seemingly strong US Dollar recovery. However, the Canadian Retail Sales report released on Friday has taken a toll on the Loonie, pushing it lower against its US counterpart. The market sentiment remains bearish as investors approach a week filled with crucial economic data releases, anxiously awaiting the Federal Reserve's (Fed) interest rate announcement for potential further downside pressure on the USD/CAD pair.

Adding to the already gloomy outlook is the rekindling tension between Russia and Ukraine, threatening to tighten oil supplies. This looming possibility casts a dark shadow on the Loonie, dampening any hopes of an upside recovery for the currency.

Given this bearish landscape, traders are exercising caution, keeping a close eye on economic indicators and geopolitical developments that could exacerbate the downward spiral in the USD/CAD pair. The unfavorable balance between the recovering US Dollar and the battered Loonie intensifies the overall pessimistic sentiment, prompting investors to remain vigilant in their search for potential shorting opportunities amid the complex market conditions.

TurnAround Point: 1.3210

Our preference

Short positions below 1.3210 with targets at 1.3150 & 1.3130 in extension.

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USD/CAD continues to nurse its wounds around 1.3175-80 following a sharp decline, marking its largest daily loss in eight days. The Loonie pair succumbed to downward pressure as WTI crude oil prices surged to a three-month high, causing concerns about supply constraints to ease. Furthermore, the US Dollar's resilience, backed by marginally improved PMI data and yields, added to the bearish sentiment during a lackluster Asian session on Tuesday.