USD/CAD Daily Forecast – 20 EMA Remains A Major Resistance Level

USD/CAD Video 18.06.20.

Canadian Dollar Gets Support From Bullishness On The Oil Price Front

USD/CAD is mostly flat today as the U.S. dollar strength against a broad basket of currencies is offset by oil price upside.

Today, the U.S. has reported disappointing employment data. Initial Jobless Claims stayed high at 1.5 million while Continuing Jobless Claims report showed that 20.5 million Americans were still getting unemployment benefits.

Meanwhile, Canada reported reassuring ADP Employment Change data for May while the New Housing Price Index showed that prices increased by 0.1% month-over-month.

The near-term dynamics of USD/CAD will depend on two main factors. First, the U.S. dollar continues its attempts to rebound, and the U.S. Dollar Index has firmly settled above the 97 level. A continuation of the current trend will be bullish for USD/CAD.

Second, WTI oil has decent chances to get above the nearest resistance at $40 and get additional boost from speculative traders. Canadian oil trades at a discount to WTI but it will also get a boost in case WTI rallies above $40. This scenario will be bearish for USD/CAD.

There’s a possibility that the strength of the U.S. dollar will be offset by higher oil prices, and USD/CAD will continue to trade in a volatile fashion near current levels .

Technical Analysis

USD/CAD continues its attempts to get above the 20 EMA at 1.3610. This level has already been tested several times and proved its strength. Previously, USD/CAD met resistance near 1.3630. Given the strength of the 20 EMA level, USD/CAD will develop significant upside momentum if it manages to get above it, so I would not expect much resistance at 1.3630.

In this scenario, USD/CAD will head towards the major resistance level at 1.3730, although it can also face some resistance near the recent high at 1.3690.

On the support side, USD/CAD continues to get buyer interest near 1.3500. USD/CAD has already made three attempts to test this level but they failed. In case USD/CAD manages to settle below 1.3500, it will return to the previous downside mode and head towards the next support level at 1.3440.

For a look at all of today’s economic events, check out our economic calendar.