USD/CAD Daily Forecast – Canadian Dollar Gains Ground On Strong Oil

USD/CAD Video 05.10.20.

Canadian Dollar Gains Ground Against U.S. Dollar At The Start Of The Week

USD/CAD managed to get below the support at the 50 EMA at 1.3280 and is trying to develop additional downside momentum as the U.S. dollar is losing ground against a broad basket of currencies.

The U.S. Dollar Index declined below the 20 EMA at 93.65 and tried to settle below 93.50 as traders increased purchases of riskier currencies amid signs that U.S. President Donald Trump’s health condition was improving.

News about Trump’s health supported a rally in the oil market which provided a boost to the Canadian dollar.

In addition, the market hopes that Republicans and Democrats will be able to find consensus on the new coronavirus aid package bill. White House Chief of Staff Mark Meadows noted that Donald Trump wanted to get the deal done, although it was not clear whether the two sides were willing to adjust their positions in order to get to a compromise deal.

Today, the U.S. reported that Services PMI decreased from 55 in August to 54.6 in September, fully in line with the analyst consensus. Numbers above 50 show expansion.

The U.S. services segment continues to recover but it can still find itself under pressure in the upcoming months if the U.S. lawmakers do not provide additional stimulus at a time when the country continues its struggle against the coronavirus pandemic.

Technical Analysis

USD to CAD is currently trying to gain additional downside momentum below the 50 EMA at 1.3280.

In case this attempt is successful, USD to CAD will head towards the next support level at 1.3235. A move below the support at 1.3235 will open the way to the test of the major support level at 1.3200. This support level is set to be strong, and USD to CAD will likely need additional catalysts to get below 1.3200.

If this happens, USD to CAD will continue its downside move and test the next support level at 1.3175.

On the upside, a move above the 50 EMA at 1.3280 will push USD to CAD towards the next resistance level at 1.3330. If USD to CAD gets above 1.3330, it will gain more upside momentum and move towards the major resistance level at 1.3420.

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