USD/CAD Daily Forecast – Canadian Dollar Enjoys Support

USD/CAD Video 02.06.20.

Canadian Dollar Gains Ground Together With Other Commodity-Related Currencies

USD/CAD continues its downside move as the U.S. dollar remains under pressure against a broad basket of currencies and is especially weak against commodity-related currencies.

Global markets ignore the increase in U.S. – China tensions and protests in the U.S. while they focus on the upcoming recovery.

The U.S. dollar has served as a safe haven asset of last resort during the acute phase of the coronavirus crisis but has lost support as investors started to buy riskier currencies in hopes for a robust economic recovery.

The U.S. Dollar Index, which measures the strength of the U.S. dollar against a broad basket of currencies, has firmly settled below the 98 level and continues its downside move.

Earlier, the U.S. Dollar Index has left the range between 99 and 101, and the momentum from the downside breakout is very significant.

Oil provides additional support for the Canadian currency as traders bet on the extension of current production cuts.

The near-term setup remains highly favorable for the Canadian currency as it benefits from the move into riskier assets and commodity price upside.

Technical Analysis

USD/CAD gained significant downside momentum after it breached the previous support level at 1.3730. The downside move was very fast, and USD/CAD mostly ignored support levels on its way down.

Most recently, USD/CAD managed to settle below the support level at 1.3570 and is testing the next support level at 1.3500.

In case USD/CAD gets below 1.3500, it will move towards the next support level at 1.3440. A move below the support at 1.3440 will open the way to the next support level at 1.3335.

On the upside, the nearest resistance for USD/CAD is located at the previous support level at 1.3570. The downside move was very fast so few levels were respected, and the next resistance level is located at 1.3730.

RSI is getting close to the oversold territory so USD/CAD may need to take a break after such a fast move. At the same time, the downside pressure on the U.S. dollar is seen across a broad basket of currencies so the downside momentum has decent chances to persist in the near term.

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