USD/CAD Daily Forecast – Canadian Dollar Moves Lower As Traders Dump Riskier Assets

USD/CAD Video 19.05.21.

U.S. Dollar Gains Ground Against Canadian Dollar

USD/CAD managed to get back above 1.2100 while the U.S. dollar gained some ground against a broad basket of currencies.

The U.S. Dollar Index is currently moving towards the resistance at the 90 level. If the U.S. Dollar Index gets above this level, it will head towards the next resistance at 90.30 which will be bullish for USD/CAD.

Today, Canada reported that Inflation Rate increased by 0.5% month-over-month in April compared to analyst consensus which called for growth of 0.4%. On a year-over-year basis, Inflation Rate increased by 3.4% compared to consensus of 3.2%. Core Inflation Rate grew by 2.3% year-over-year while analysts expected that it would grow by 2.1%.

Inflation in Canada was a bit higher than expected, and it looks that markets are increasingly worried that inflation may get out of control. This is bearish for riskier assets, including Canadian dollar.

At the same time, it should be noted that Treasury yields have moved lower today as traders rushed into safe haven assets. Lower yields are bearish for the American currency.

Today, foreign exchange market traders will have a chance to take a look at FOMC Minutes from the last meeting. Any comment that could be interpreted as not dovish enough can provide more support to the U.S. dollar.

Technical Analysis

USD to CAD managed to settle above 1.2080 and is trying to settle above the resistance at 1.2100. In case this attempt is successful, USD to CAD will move towards the next resistance level at 1.2130.

A move above the resistance at 1.2130 will push USD to CAD towards the resistance at 1.2170. If USD to CAD gets above this level, it will head towards the resistance which is located at the 20 EMA at 1.2195.

On the support side, the previous resistance at 1.2080 will serve as the first support level for USD to CAD. If USD to CAD settles below this level, it will move towards the next resistance at 1.2065. A successful test of this level will open the way to the test of the resistance at 1.2040.

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