USD/CAD Daily Forecast – Attempt To Settle Above The 20 EMA

USD/CAD Video 15.06.20.

U.S. Dollar Takes A Pause After The Recent Rally

USD/CAD continues its attempts to settle above the 20 EMA at 1.3635 while the global markets are under pressure amid fears of a second coronavirus wave.

Despite the fact that most asset classes are losing ground today, the U.S. dollar is under pressure against a broad basket of currencies, and the U.S. Dollar Index has settled closer to the 97 level.

This is an interesting development since the U.S. dollar has served as a safe haven asset of last resort during the current crisis so the demand for the American currency should increase when riskier assets are under pressure.

A possible explanation of this phenomenon is that the U.S. Dollar Index has made a rebound from 95.70 to 97.50 in a very quick fashion so it is experiencing a technical pullback.

Meanwhile, oil is once again under pressure as traders worry about the speed of oil demand recovery, which is bearish for the Canadian dollar. However, it looks like general market sentiment will play a bigger role for USD/CAD dynamics in the upcoming trading sessions.

Technical Analysis

USD/CAD is consolidating near the 20 EMA at 1.3635 after the recent upside move. USD/CAD has already made two attempts to get above this level but these attempts were met with increased selling pressure.

In case USD/CAD manages to settle above the 20 EMA, it will gain additional upside momentum and head towards the next resistance level at 1.3730.

I’d note that the 50 EMA has already declined to 1.3770 so the area between 1.3730 and 1.3770 will likely serve as a major resistance for USD/CAD in case it continues the upside move.

On the support side, the nearest support for USD/CAD is located at 1.3570. This support level has just been tested and proved its strength. In case USD/CAD manages to settle below this support level, it will head towards the next support at 1.3500.

Most likely, USD/CAD will need an additional increase in demand for safe haven assets like the U.S. dollar to continue the current upside move and test the next resistance at 1.3730.

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