USD/CAD has been bullish since the second week of this year, as Crude Oil turned bearish, losing more than $16 and pulling the CAD lower with it, hence the uptrend since then. But, OPEC is thinking about cutting Oil production again, this time by 600k barrels, so Crude Oil has retraced higher in the last few days.
The CAD has retraced this week, being pulled higher from Oil, as well as from the improvement in the risk sentiment during this week, despite cases of coronavirus increasing exponentially. As a result, USD/CAD has retraced lower this week, breaking below the 20 SMA (grey) and the 50 SMA (yellow).
Looking at the daily chart above, we see that this pair has failed three times to move above the area surrounding 1.3350. So, it seems that a resistance zone has formed around this level and USD/CAD reversed again earlier this week, for the fourth time. The price hasn’t fallen too far from the resistance, so there’s still a chance that we might return and test it again, but we should keep in mind that if it fails again, the potential for the downside is around 300 pips from up there.