The US Dollar began 2020 on a tear, enjoying a boost from safe haven demand as the coronavirus pandemic crippled the global economy and spooked investors. As economies continued to regain their footing, the US Dollar lost much of its luster as the Federal Reserve looks to stand firm on its accommodative policy stance into 2023.

On the other hand, the Canadian Dollar is well positioned for continued economic recovery. Crude oil prices have largely stabilized and although the Bank of Canada has vowed its own procedures to revive the Canadian economy, they pale in comparison to the measures taken by the Federal Reserve. As a result, the Canadian Dollar may continue to outperform the US Dollar as 2021 unfolds.

USD/CAD PRICE CHART: WEEKLY TIME FRAME (JANUARY 2014 – DECEMBER 2020)

Chart prepared by Peter Hanks, created with IG

The downtrend USD/CAD experienced in the back half of 2020 may be poised to continue through 2021. Key support levels were taken out in the twilight of last year which might see the pair test the various swing lows from 2017 and 2018. These areas may serve as support if price continues lower, with any breakdowns allowing for further losses still.