TriumphFX Forex Analysis – CAD Pairs – April & May 2020

AUDCAD – Daily and 4 Hour Charts

As suggested in our last AUD chart analysis, price has been bearish and has swung lower.

The daily chart continues to show a clear downtrend – price action is forming lower swing lows and lower swing highs. AUDCAD is currently in a retrace phase. The daily moving averages are bearish and widening, suggesting that price may attempt to swing to recent lows. AUDCAD is up-trending within a bullish channel on the 4 hour time-frame.

Opportunities to go short could exist around the daily trend resistance area, around the daily moving averages, around the 4 hour bullish channel resistance area and around the horizontal levels at 0.9015, 0.9025, 0.9140 and 0.9230. A bearish move may stall or reverse around the 4 hour bullish channel support area, around the 4 hour moving averages and around the horizontal levels at 0.8750, 0.8475, 0.8390, 0.8310, 0.8275 and 0.8140.

The Reserve Bank of Australia (RBA) cut rates again in their April 2020 meeting. Rates were cut by a further 0.25%, bringing the official bank rate to 0.25% (a record low). Rates have since stayed the same. The current low rate is needed to help reduce the unemployment rate and stimulate the economy due to COVID-19 recession fears. The RBA will continue to monitor the labour market and inflation. Rates will not be raised until targets are met.

The Bank of Canada (BOC) followed the US by slashing it’s benchmark interest rate. The intent of the rate cut is to help boost the economy during the COVID-19 pandemic. The current rate is now 0.25%. The economy is currently performing well and inflation targets are currently at their potential. If coronavirus fears deescalate, the BOC could increase rates again in the near future.

CADCHF – Daily and 4 Hour Charts

Price is clearly down-trending on the daily time-frame and is currently in a retrace phase. The daily moving averages are bearish and widening, signalling that the downtrend could continue. CADCHF is looking indecisive on the 4 hour time-frame. The moving averages confirm this – they are tightening and are moving sideways. Price action has formed a diagonal support of the 4 hour.

Shorting opportunities may exist around the 50.0% and 61.8% Fib levels, around the daily moving averages, around the daily trend resistance area, if CADCHF closes below the 4 hour diagonal support and around the horizontal levels at 0.6975, 0.7260 and 0.7440. A bearish move could find support around the 4 hour diagonal support, the 4 hour moving averages and around the horizontal support levels at 0.6680 and 0.6615.

The Swiss National Bank (SNB) continues to keep rates at the all-time low of -0.75%. The Swiss economy continues to be stagnant. The economy was showing signs of positive momentum but COVID-19 is causing the economy to contract. The Swiss Franc continues to be highly valued as a safe-haven currency. The SNB recently announced that it will continue to intervene with in foreign exchange markets but will likely keep rates unchanged until at least 2021.

CADJPY – Daily and 4 Hour Charts

CADJPY is looking very similar to CADCHF – clear daily downtrend and market indecision of the 4 hour. The 4 hour chart has also formed a diagonal support area, just like CADCHF. The daily moving averages have crossed bearish, suggesting that price may attempt a bearish move lower. Price may start ranging though between the recent lows at 74.75 and the horizontal resistance at 78.20.

Selling opportunities could exist around any of the key Fib levels, around the daily moving averages and around the horizontal levels at 78.15, 78.30, 78.70, 80.00 and 81.50. A bearish move may be rejected or reverse around the 4 hour diagonal support area and around the horizontal support levels at 75.25, 74.80 and 74.55.

The Bank of Japan (BOJ) continues to keep interest rates at the record low of -0.10%. The Japanese economy is performing well and showing signs of expansion. COVID-19 recession fears could stunt economic growth though.

EURCAD – Daily and 4 Hour Charts

The EURCAD has been bullish. Price has formed a clear higher high and is above a number of key resistance levels, suggesting that the EURCAD could start up-trending. The moving averages confirm this – they have crossed bullish and are widening. Price is currently in a retrace move and is finding support around the 50.0% Fib level and previous daily horizontal resistance at 1.5145. EURCAD on the 4 hour chart has been down-trending as price retraces on the daily. Price action has formed a diagonal resistance area.

Opportunities to go long may exist around the 50.0% and 61.8% Fib levels, around the daily dynamic support of the moving averages, if price closes above the 4 hour diagonal resistance area and around the horizontal levels at 1.5145, 1.4910 and 1.4740. A bullish move could find resistance around the 4 hour moving averages, around the 4 hour diagonal resistance area and around the horizontal resistance levels at 1.5765, 1.5845 and 1.5965.

The European Central Bank (ECB) continue to keep rates at the record low of 0.00%. Rates have not been cut into negative territory, despite the COVID-19 outbreak. Instead, the ECB has launched an asset buying program. Due to weak trade growth and economic forecasts, rates are likely to stay low for the foreseeable future. The COVID-19 pandemic is just another economic challenge for the Euro zone.

GBPCAD – Daily and 4 Hour Charts

The daily time-frame is showing clear market indecision – price is choppy and moving sideways. The daily and 4 hourly moving averages are also moving sideways and have been crossing frequently – confirming the market indecision. GBPCAD is ranging between 1.6600 and 1.7850. Price is also looking indecisive on the 4 hour time-frame.

Trading opportunities could exist around the support and resistance areas of the range and if GBPCAD moves out of the range (break-out trade). A break to the downside may find support around the horizontal support levels 1.6225 and 1.5885. Trading opportunities could also exist around the 4 hour horizontal levels at 1.7625 and 1.7240.

The Bank of England (BOE) has followed other central banks and has cut rates to combat economic challenges caused by the COVID-19 pandemic. The UK interest rate is now set at 0.10% (a historic low). The UK has now left the EU, meaning that Brexit uncertainty should weigh less heavily on the Pound.

USDCAD – Daily and 4 Hour Charts

Price has been up-trending on the daily chart. The USDCAD is currently in a retrace move and is coming off the 50.0% retrace level. The moving averages are bullish and widening, signalling that the upside direction could continue. The 4 hour chart shows a downtrend as price has been retracing on the daily chart. The USDCAD has formed a diagonal resistance on the 4 hour.

Long opportunities may exist around the 50.0% and 61.8% Fib levels, around the daily moving averages, if price closes above the 4 hour diagonal resistance and around the previous horizontal resistance at 1.3535. A bullish move could be rejected or reverse around the 4 hour diagonal resistance and around the horizontal resistance levels at 1.4250, 1.4495 and 1.4650.

The Federal Reserve has announced a record breaking stimulus package, aimed at US households and employers. The US Federal Open Market Committee (FOMC) has unexpectedly cut rates by 150 points due to heightened concerns regarding the COVID-19 outbreak. The current Fed Funds rate is currently 0.25%, back at post-2008 levels. There is some concern that keeping rates low could cause greater issues in the US’ financial sector. The USD has been acting as a safe haven amid the COVID-19 outbreak. There are some concerns that the COVID-19 pandemic may hit the US hardest, causing a reversal of the recent USD strength.

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