USD/CAD Daily Forecast – Attempt To Settle Above 1.3050

USD/CAD Video 02.09.20.

U.S. Dollar Continues To Rebound

USD/CAD is trying to settle above 1.3050 as the U.S. dollar continues to rebound against a broad basket of currencies while oil makes an attempt to settle below the $42 level.

Today, the U.S. provided ADP Employment Change report which showed that 428,000 jobs were created in the private sector in August. Analysts expected that the report would show a creation of 950,000 jobs.

However, the disappointing report did not put any pressure on the U.S. dollar which is gaining more ground against a broad basket of currencies.

The U.S. Dollar Index has managed to settle above 92.50 and tries to get to the test of the 20 EMA level at 93. The 20 EMA level is a very important level for the U.S. Dollar Index since a move above this level will signal that the current downside momentum has come to an end.

In this scenario, U.S. Dollar Index will gain more upside momentum which would be bullish for USD/CAD.

The current weakness of WTI oil is also a negative catalyst for the Canadian dollar. WTI oil is trying to settle below the 20 EMA at $42.40. If this attempt is successful, WTI oil will gain more downside momentum, putting pressure on commodity-related currencies including the Canadian dollar.

Technical Analysis

USD to CAD is trying to gain more upside momentum above 1.3050. If this attempt is successful, USD to CAD will head to the test of the next significant resistance level at 1.3135.

If USD to CAD manages to settle above 1.3135, it will move towards the 20 EMA at 1.3170. A move above the 20 EMA will mark the end of the current downside momentum so I’d expect a lot of interest at this level.

On the support side, the previous resistance at 1.3050 will likely serve as the first support level for USD to CAD. In case USD to CAD manages to settle below this level, it will gain downside momentum and head to the test of the recent lows at 1.3000.

Despite the recent rebound, USD to CAD remains in a downside trend, and the U.S. dollar will need additional catalysts to break this trend.

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