USD/CAD Daily Forecast – Another Test Of The Support At 1.2625

USD/CAD Video 21.01.21.

U.S. Dollar Is Mostly Flat Against Canadian Dollar

USD/CAD made another attempt to settle below the support at 1.2625 but failed to develop sufficient downside momentum while the U.S. dollar remained under pressure against a broad basket of currencies.

The U.S. Dollar Index declined below the support at the 20 EMA at 90.35 and moved towards the 90 level but received support at 90.05 and rebounded closer to 90.25. In case the U.S. Dollar Index gets to the test of the 90 level, USD/CAD may find itself under additional pressure.

Today, U.S. reported that Initial Jobless Claims declined from 926,000 (revised from 965,000) to 900,000. Analysts expected Initial Jobless Claims of 900,000. Continuing Jobless Claims report was also better than expected as Continuing Jobless Claims decreased from 5.18 million (revised from 5.27 million) to 5.05 million.

Meanwhile, Housing Starts and Building Permits reports indicated that the U.S. housing market remained in a good shape. Housing Starts increased by 5.8% month-over-month in December while Building Permits grew by 4.5%.

Interestingly, better-than-expected economic reports failed to provide any support to the U.S. dollar as foreign exchange market traders remained focused on Biden’s huge stimulus plan.

In Canada, ADP Employment Change report indicated that private business employment declined by 28,800 in December while analysts projected that it would grow by 18,000 as the negative impact of the second wave of the virus was stronger than expected.

Technical Analysis

USD to CAD made an attempt to settle below the support level at 1.2625 but received strong support near 1.2590 and rebounded back above 1.2625. If USD to CAD settles below 1.2625, it will have a good chance to get to the test of the next support level at 1.2590.

A move below this level will push USD to CAD towards the next support at 1.2550. RSI is in the moderate territory so there is plenty of room to gain additional downside momentum.

On the upside, the nearest resistance level for USD to CAD is located at 1.2665. If USD to CAD gets above this level, it will head towards the resistance at 1.2700. A move above 1.2700 will open the way to the test of the resistance at the 20 EMA at 1.2720.

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