20.02.202011:56 Forex-elemzések és áttekintések: Loonie's difficulty: the threat of a decline

The loonie is threatened with a decline. This is due to the fact that earlier, the currency actively grew, trying to exceed its highs. However, experts say that the ambitious plans were not destined to come true.

On Wednesday, February 19, following an active growth the day before, the USD/CAD pair began to decline steadily. Recall that earlier, the buyers of the loonie were able to return the pair to its weekly highs at 1.3277. Moreover, the currency was also supported by the strengthening of the dollar, which relied on positive statistics from the United States.

Regardless, the favorable picture was disrupted by the weak macroeconomic data from Canada. According to the data, production sales in the country fell by 0.7% in December 2019, going against the expectations of analysts, who predicted a 0.5% increase in the index.

Experts delivered a new forecast on the annual inflation in Canada, suggesting an increase of up to 2.3%. If this happens, the Bank of Canada may not ease the monetary policy, which the sellers of the loonie are hoping for. Meanwhile, on Wednesday, the buyers of loonie were active, which made the pair go below 1.3250. Then, on Thursday, February 20, the pair was once again within these limits, trying to overcome 1.3249.

At the moment, experts believe that the best option for the USD/CAD pair is to open short-term sales with a target of 1.3150.

The loonie is also supported by the rise in oil prices caused by the escalation of geopolitical tensions in the Middle East. Recall that the conflict was provoked by rocket attacks on the port of Tripoli.

According to experts, even though there is a threat of a decline on the loonie, it will not be the same as that of the European currency. Analysts expect a moderate drop in the short and medium term, and then are covery. Experts are confident that the currency will be able to hold its current positions, which took a lot of effort to win.