USD/CAD Daily Forecast – Attempt To Settle Below 1.3200

USD/CAD Video 18.08.20.

U.S. Dollar Dives To New Lows Against A Basket Of Currencies

USD/CAD is trying to settle below 1.3200 as the U.S. Dollar Index , which measures the strength of the U.S. dollar against a broad basket of currencies, declined to yearly lows.

The U.S. Dollar Index has managed to get below the support at 92.50 and gained significant downside momentum. However, the U.S. Dollar Index found support near 92.10 and is currently trying to get back to 92.50.

This is a very interesting moment. In case the U.S. Dollar Index manages to get back above 92.50 after declining towards the 92 level, many traders will believe that it was a fake breakout and initiate long positions in the U.S. dollar which would be bullish for USD/CAD.

Interestingly, better-than-expected U.S. Housing Starts and Building Permits reports did not provide any immediate support to the American currency.

Both reports highlighted a strong rebound in the U.S. housing sector but currency traders remained focused on the misfortunes of the new U.S. coronavirus aid package.

Today, U.S. Treasury Secretary Steven Mnuchin stated that he hoped that House Speaker Nancy Pelosi was ready to continue negotiations on the new stimulus package.

It remains to be seen whether Republicans and Democrats will be able to reach any consensus on the new aid package. The absence of additional stimulus for the U.S. economy has recently served as a bearish catalyst for the U.S. dollar.

Technical Analysis

USD to CAD has managed to get below the support at 1.3200 and tries to gain more downside momentum. As I noted above, a lot will depend on whether the U.S. Dollar Index stays below 92.50 and continues its downside move.

In this case, USD to CAD will have good chances to test the next support level at 1.3135.

On the upside, the previous support at 1.3200 will likely serve as the first resistance level for USD to CAD.

A move above this level will open the way to the test of the next resistance level at 1.3235. In case USD to CAD manages to settle above 1.3235, it will gain upside momentum and head towards 1.3330.

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