USD/CAD Daily Forecast – Canadian Dollar Gains Ground As BoC Ends QE

U.S. Dollar Is Under Pressure Against Canadian Dollar

USD/CAD is currently trying to settle below the support at 1.2340 while the U.S. dollar is mostly flat against a broad basket of currencies.

The U.S. Dollar Index has recently made an attempt to settle below the 20 EMA at 93.80 but received support near 93.75 and rebounded closer to the 94 level. in case the U.S. Dollar Index settles above this level, it will head towards the resistance at 94.20 which will be bullish for USD/CAD.

The main event of the day for foreign exchange market traders was the Bank of Canada Interest Rate Decision. The bank left the interest rate unchanged at 0.25% and announced that it will end its quantitative easing program. From now on, the bank will move into the reinvestment phase and buy government bonds to replace maturing bonds.

The decision to end QE provided significant support to Canadian dollar which moved higher despite pullback in oil markets. WTI oil found itself under pressure after API and EIA reports indicated that crude inventories increased, which was bearish for commodity-related currencies.

Technical Analysis

USD to CAD is currently trying to get back below 1.2340. In case this attempt is successful, USD to CAD will move towards the support at 1.2320.

A move below the support at 1.2320 will push USD to CAD towards the next support level which is located near the recent lows at 1.2300. If USD to CAD declines below this level, it will continue its downside move and head towards the support at 1.2270.

On the upside, the nearest resistance level for USD to CAD is located at 1.2380. In case USD to CAD manages to climb back above this level, it will head towards the next resistance at 1.2400. A successful test of the resistance at 1.2400 will push USD to CAD towards the resistance level which is located near the 20 EMA at 1.2425.

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