USD/CAD Daily Forecast – Canadian Dollar Lacks Momentum Ahead Of The Weekend

Resistance At 1.2525 Stays Strong

USD/CAD continues its attempts to settle above the resistance at the 20 EMA at 1.2525 while the U.S. dollar is losing ground against a broad basket of currencies.

The U.S. Dollar Index is currently testing the support level at the 20 EMA at 92.55. In case this test is successful, the U.S. Dollar Index will move towards the support at 92.40 which will be bearish for USD/CAD.

Today, U.S. released preliminary Michigan Consumer Sentiment report which indicated that Consumer Sentiment declined from 81.2 in July to 70.2 in August compared to analyst consensus of 81.2.

This report had a major negative impact on the American currency. Treasury yields moved lower after the release of the report, and the yield of 10-year Treasuries is currently trying to settle below 1.30%.

Consumer Sentiment declined to multi-month lows which means that consumers believe that economy’s growth will slow down. For markets, weaker Consumer Sentiment means that inflation has likely peaked, so the Fed should not hurry with the reduction of its asset purchase program.

Technical Analysis

USD to CAD is currently stuck in a tight range between the support level at 1.2500 and the resistance level at the 20 EMA at 1.2525.

If USD to CAD manages to settle above the 20 EMA at 1.2525, it will move towards the next resistance level which is located at 1.2550. In case USD to CAD gets above 1.2550, it will head towards the major resistance at 1.2590. A move above the resistance at 1.2590 will signal that USD to CAD is ready to develop additional upside momentum.

On the support side, the nearest support level for USD to CAD is located at 1.2500. If USD to CAD manages to settle below this level, it will get to the test of the next support at 1.2480.

A successful test of the support at 1.2480 will push USD to CAD towards the next support at the 50 EMA at 1.2470. In case USD to CAD declines below the 50 EMA, it will move towards the support at 1.2450.

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