The Canadian Dollar plunged against most major currencies last month as the Loonie fell alongside the crash in crude oil. USD/CAD gained over 5% and now trades nearly 9% higher year-to-date. Upside in USD/CAD was likely compounded by broad-based strength in the US Dollar, which a prior Canadian Dollar forecast discussed in detail.

USD/CAD price action has since pulled back, however, after recent monetary policy intervention from the Bank of Canada and Federal Reserve provided relief to market strain and US Dollar liquidity pressure.

USD/CAD PRICE CHART: DAILY TIME FRAME (31 DECEMBER 2019 TO 06 APRIL 2020)

The Canadian Dollar has also started to recover with a modest rebound in crude oil sparked by rumor of an OPEC meeting later this week. Spot USD/CAD currently fluctuates around the 1.4130 price, which roughly corresponds with its 9-day exponential moving average, after sliding over 500-pips from its March 18 swing high.

Recently defined technical support and resistance levels might continue to jostle USD/CAD price action while market participants digest oil price headlines and upcoming data releases teed up to detail economic damage caused by COVID-19.

As such, spot USD/CAD could be kept relatively contained between its March 27 swing low and March 31 swing high, which are levels of technical confluence underpinned by the 38.2% and 23.6% Fibonacci retracements of its year-to-date trading range.

USD/CAD PRICE CHART: 4-HOUR TIME FRAME (06 MARCH TO 06 APRIL 2020)

As USD/CAD consolidates, spot prices have developed a notable series of higher lows and lower highs that appear to form a triangle pattern on a 4-hour chart. The positively-sloped support trendline, extended through the March 09 and March 27 swing lows, might look to bolster spot USD/CAD going forward.

Although, resistance posed by the 1.4200 handle and shorter-term downtrend since last month’s top could keep the Canadian Dollar propped up and a lid on USD/CAD price action. A breakout above last week's high or breakdown below last week's low has potential to open up the door to a retest of the March 18 top or bridge the March 08 gap higher.