USD/CAD Daily Forecast – Canadian Dollar Gains More Ground

USD/CAD Video 22.07.20.

U.S. Dollar Remains Under Pressure

USD/CAD continues to trend down as the U.S. dollar is losing ground against a broad basket of currencies while WTI oil stays near the key level at $41.50.

The U.S. Dollar Index has settled below the 95 level and made an attempt to test March lows. The American currency remains under pressure amid doubts that the U.S. Democrats and Republicans will be able to quickly reach consensus on the next coronavirus aid package.

Meanwhile, Canada provided inflation data for June. Inflation Rate was 0.8% month-over-month compared to analyst consensus of 0.4%. Core Inflation Rate was 1.1% year-over-year, higher than the analyst consensus of 0.9%.

Canada’s inflation data showed that consumer activity has rebounded in June as the economy reopened. It is likely that delayed demand boosted consumer activity and pushed prices higher. If that’s the case, inflation will be lower in the upcoming months.

Today, the U.S. has published Existing Home Sales data for June. Existing Home Sales increased by 20.7% on a month-over-month basis compared to analyst consensus which called for an increase of 24.5%.

While Existing Home Sales grew less than analysts expected, the report showed a robust rebound of activity in the housing sector.

Technical Analysis

USD to CAD managed to settle below 1.3440 and continues its downside move. The nearest support level for USD to CAD is located at 1.3360.

In case USD to CAD settles below this support level, it will head towards the low of the previous downside move at 1.3315. RSI is not in the oversold territory so USD to CAD has plenty of room to develop additional downside momentum.

On the upside, the recent support at 1.3440 will likely serve as the first resistance level for USD to CAD. If USD to CAD gets above this level, it will head towards the next resistance at 1.3500. This level will attract a lot of interest and could serve as a major obstacle on the way up.

Currently, USD to CAD is in a downside trend and has good chances to test lower levels. Broader U.S. dollar strength will be necessary to break this trend.

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