USD/CAD Daily Forecast – Canadian Dollar Moves Higher Ahead Of The Weekend

USD/CAD Video 29.01.21.

U.S. Dollar Is Under Pressure

USD/CAD declined below the support at 1.2800 and is currently trying to settle below the next support level at 1.2775 while the U.S. dollar is mostly flat against a broad basket of currencies.

The U.S. Dollar Index has recently made an attempt to settle below the nearest support level at the 20 EMA at 90.35 but failed to develop sufficient downside momentum and rebounded closer to 90.50. The nearest significant resistance level is located at the 50 EMA at 90.75. If the U.S. Dollar Index settles above this level, it will head towards the next resistance at 91.10 which will be bullish for USD/CAD.

Today, the U.S. reported that Personal Income increased by 0.6% month-over-month in December while Personal Spending declined by 0.2%. Both reports were better than analyst estimate. Meanwhile, U.S. Pending Home Sales declined by 0.3% in December compared to analyst consensus which called for a decline of 0.1%.

Interestingly, the current sell-off in the equity market did not provide additional support to the U.S. dollar which often serves as a safe haven asset of last resort. It looks like foreign exchange market traders have decided to ignore vaccination-related worries and are not ready to make major moves until the next week.

Technical Analysis

USD to CAD declined below the 50 EMA at 1.2800 and is testing the next support level at 1.2775. If USD to CAD manages to settle below this level, it will head towards the next support level which is located near the 20 EMA at 1.2750. A successful test of the support at 1.2750 will push USD to CAD towards the next support at 1.2720.

On the upside, the previous support at the 50 EMA at 1.2800 will likely serve as the first resistance level for USD to CAD. If USD to CAD manages to settle above this level, it will head towards the next resistance at 1.2835.

In case USD to CAD gets above the resistance at 1.2835, it will move towards the resistance at 1.2860. A move above this level will open the way to the test of the resistance at the recent highs at 1.2880, which has already been tested several times and proved its strength.

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