USD/CAD Daily Forecast – Canadian Dollar Is Under Serious Pressure

USD/CAD Video 28.10.20.

U.S. Dollar Gains Ground Against Canadian Dollar Amid Increased Demand For Safe Haven Assets

USD/CAD is trying to settle above 1.3300 as the U.S. dollar is gaining ground against a broad basket of currencies while oil is under serious pressure due to fears about the second wave of lockdowns in Europe.

The U.S. Dollar Index has settled above the 20 EMA at 93.30 and made an attempt to get above the 50 EMA at 93.55 as the American currency benefited from the increased demand for safe haven assets amid global market sell-off.

If the U.S. Dollar Index moves above the resistance at the 50 EMA, it will gain additional upside momentum which will be bullish for USD/CAD.

Today, Bank of Canada left the interest rate unchanged at 0.25%, in line with the analyst consensus. Interestingly, the Bank of Canada decided to recalibrate its quantitative easing program to shift its purchases towards longer-term bonds.

The Bank stated that such bonds had more influence on borrowing rates for businesses and households. By buying longer-term bonds, Bank of Canada hopes to increase their price and, therefore, decrease their yield.

In addition to its quantitative easing program, the central bank promised to keep interest rates low until it achieved the 2% inflation target. According to the Bank’s projections, this would not happen until into 2023, so traders and investors should prepare for several years of very low interest rates.

Technical Analysis

USD to CAD has managed to get above 1.3300 and tested the resistance at 1.3330. In case USD to CAD gets above 1.3330, it will head towards the next major resistance level at 1.3420. There are no important levels between 1.3330 and 1.3420 so this move may be fast.

A successful test of the resistance at 1.3420 will push USD to CAD towards the next resistance level at 1.3450.

On the support side, the nearest support level for USD to CAD is located at 1.3260. If USD to CAD declines below this level, it will head towards the next support at the 50 EMA at 1.3225. A move below the 50 EMA will push USD to CAD towards the support at 1.3200.

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