USD/CAD Daily Forecast – Canadian Dollar Failed To Move Higher Against U.S. Dollar

USD/CAD Video 21.10.20.

Canada’s Retail Sales Grew By Just 0.4% In August

USD/CAD is trying to settle above the nearest resistance at 1.3135 as weak oil price offsets U.S. dollar’s weakness against a broad basket of currencies.

The U.S. Dollar Index declined below the support at 92.80 and tested the next support level at 92.50 amid hopes for a new U.S. coronavirus aid package. The U.S. dollar was especially weak against the British pound which rallied on improved chances of a Brexit deal between EU and UK. If the U.S. Dollar Index continues its downside move and settles below 92.50, USD/CAD will find itself under pressure.

Today, Canada reported that Inflation Rate increased by 0.5% year-over-year in September compared to the analyst consensus of 0.4%. Core Inflation Rate grew by 1% while analysts expected growth of 0.7%.

Canada’s Retail Sales grew by 0.4% month-over-month in August compared to analyst consensus which called for growth of 1.1%. On a year-over-year basis, Retail Sales increased by 3.5%. Most likely, Retail Sales growth was weaker than expected as consumers remained cautious due to the coronavirus pandemic. This trend will likely continue as the virus situation has not improved since August.

Technical Analysis

USD to CAD did not manage to settle below the support level at 1.3100 and is trying to get back above the nearest resistance level at 1.3135.

If this attempt is successful, USD to CAD will gain additional upside momentum and head towards the next resistance level at the 20 EMA at 1.3200. There are no significant levels between 1.3135 and 1.3200 so this move may be fast.

A successful test of the resistance at 1.3135 will open the way to the test of the next resistance level at the 50 EMA at 1.3235.

On the support side, USD to CAD needs to get below the support at 1.3100 to continue its downside move. In case USD to CAD manages to settle below this level, it will gain downside momentum and decline towards the next support level at 1.3050.

A move below the support at 1.3050 will signal that USD to CAD is ready to test the support at September lows at 1.3000.

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