USD/CAD gained upside momentum and is trying to settle above the resistance at 1.3100.
USD/CAD is trying to get back above 1.3100 while the U.S. dollar is losing ground against a broad basket of currencies.
The U.S. Dollar Index has managed to get below the support at 92.50 and is trying to develop additional downside momentum. While the U.S. dollar is weak on the foreign exchange market, the Canadian dollar is still losing ground against the American currency as weak oil puts pressure on commodity-related currencies.
Today, the U.S. reported that Retail Sales increased by 0.3% month-over-month in October compared to analyst consensus which called for growth of 0.5%. Meanwhile, Industrial Production increased by 1.1% compared to analyst consensus of 1%. Manufacturing Production grew by 1%, in line with analyst estimates.
While the slowdown in Retail Sales is worrisome, the growth of Industrial Production and Manufacturing Production indicates that the economy continues to rebound.
Meanwhile, Canada reported that Wholesale Sales increased by 0.9% month-over-month in September. The report was better than the analyst consensus which called for growth of 0.4%.
USD to CAD gained some upside momentum and is trying to settle above the nearest resistance level at 1.3100. In case this attempt is successful, USD to CAD will head towards the next resistance level at the 20 EMA at 1.3125.
If USD to CAD manages to get above the 20 EMA, it will move towards the next resistance level at the 50 EMA at 1.3175. A successful test of this level will open the way to the resistance at 1.3200.
On the support side, the nearest support level for USD to CAD is located at 1.3080. USD to CAD has already made several attempts to settle below this level but failed to gain sufficient downside momentum.
In case USD to CAD declines below this support level, it will move towards the next support at 1.3050. A move below the support at 1.3050 will push USD to CAD towards the major support level at 1.3000. Most likely, USD to CAD will need material catalysts to settle below 1.3000.
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Vladimir is an independent trader and analyst with over 10 years of experience in the financial markets. He is a specialist in stocks, futures, Forex, indices, and commodities areas using long-term positional trading and swing trading.