USD/CAD Daily Forecast – Canadian Dollar Pulls Back

U.S. Dollar Moves Higher Against Canadian Dollar

USD/CAD is currently trying to settle above the resistance at 1.2650 while the U.S. dollar is gaining ground against a broad basket of currencies.

The U.S. Dollar Index is moving towards the resistance at the yearly highs at 94.50. A move above this level will push the U.S. Dollar Index towards the next resistance at 94.75 which will be bullish for USD/CAD.

Today, U.S. released ADP Employment Change report which indicated that private businesses hired 568,000 workers in September compared to analyst consensus of 428,000. The report is an additional positive catalyst for the American currency as it shows that the job market continues to recover, so the Fed may start to reduce its asset purchase program.

Foreign exchange market traders also continued to monitor the developments in commodity markets. WTI oil failed to get to the test of the psychologically important $80 level and declined below $77.50. If WTI oil settles below this level, it will get to the test of the support at the $77 level which will be bearish for commodity-related currencies, including Canadian dollar.

Technical Analysis

USD to CAD managed to settle above the 50 EMA which is located near the resistance level at 1.2625 and made an attempt to settle above the next resistance at 1.2650. The 20 EMA is located in the nearby, so USD to CAD may face significant resistance in the 1.2650 – 1.2660 range.

In case USD to CAD gets above the 20 EMA, it will move towards the next resistance level at 1.2685. A move above this level will push USD to CAD towards the resistance at 1.2710. If USD to CAD manages to settle above this level, it will head towards the resistance at 1.2730.

On the support side, the previous resistance level at 1.2625 will serve as the first support level for USD to CAD, although USD to CAD may also get support near the 50 EMA which is located in the nearby. In case USD to CAD settles below 1.2625, it will head towards the next support at 1.2590. A successful test of this support level will push USD to CAD towards the support at 1.2550.

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