USD/CAD Daily Forecast – Canadian Dollar Gets Hit By Rush To Safety And Lower Oil

USD/CAD Video 15.04.20.

All Catalysts Are Against The Canadian Dollar Today

USD/CAD is making a major upside move today as market participants rush to safety amid worries about the economic damage dealt by the coronavirus crisis.

The U.S. Retail Sales for March declined by 8.7% compared to the analyst consensus which called for a decline of 8%. It is highly likely that Retail Sales numbers for April will look even more grim since the U.S. will spend the whole month of April in a lockdown.

The poor economic data led to U.S. dollar strength against a broad basket of currencies, and the U.S. Dollar Index tested the 100 level. Despite the economic problems in the U.S., the U.S. Dollar continues to serve as a safe haven asset of last resort which benefits from market fear.

Another blow to the Canadian dollar was dealt by oil which has tested its recent lows following the International Energy Agency report which portrayed an unprecedented blow to oil demand.

As a result, WTI oil is trading below $20 per barrel. Western Canadian Select is firmly below $10 per barrel. Lower oil puts pressure on commodity-related currencies like the Canadian dollar.

Tomorrow, the market’s risk appetite will be tested by the release of the U.S. Initial Jobless Claims. The previous report showed that 6.6 million of Americans applied for unemployment benefits, while the analyst consensus for this week’s report calls for Initial Jobless Claims of 5.1 million.

It remains to be seen whether the global markets will be able to shrug off the negative jobs data like they did previously. If the reaction will be similar to the reaction to U.S. Retail Sales, the U.S. dollar may get additional support.

Technical Analysis

USD/CAD broke through the resistance level at 20 EMA at 1.4025 and continues to trend higher. At this point, the next resistance level for the pair is located near 1.4250.

This level has been tested several times and USD/CAD tried to settle above it but failed, so it is a strong level, and the pair will likely meet material resistance if it gets closer to 1.4250.

On the support side, the 20 EMA will likely serve as the first support for the pair. In case this level is breached to the downside, USD/CAD will move towards the 50 EMA level at 1.3870.