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

USD/CAD Video 04.12.20.

U.S. Dollar Continues To Lose Ground Against Canadian Dollar

USD/CAD gained strong downside momentum and is currently trying to settle below 1.2800 while the U.S. dollar is mostly flat against a broad basket of currencies.

The U.S. Dollar Index made an attempt to settle below the nearest support level at 90.60 but failed to develop sufficient downside momentum and moved back above this level. If the U.S. Dollar Index settles below 90.60, it will move towards the 90 level which will be bearish for USD/CAD.

Today, U.S. reported that Unemployment Rate declined from 6.9% in October to 6.7% in November compared to analyst consensus of 6.8%. Meanwhile, the Non Farm Payrolls report indicated that the economy added just 245,000 jobs in November compared to analyst consensus of 469,000.

Canadian employment reports were stronger. Canada’s Employment Change report showed that the country’s economy created 62,000 jobs in November compared to analyst consensus of 20,000. Unemployment Rate declined from 8.9% in October to 8.5% in November comapred to analyst consensus of 8.9%.

Foreign exchange market traders will also pay attention to any news about a potential stimulus package. House Speaker Nancy Pelosi has recently stated that negotiations gained momentum but it remains to be seen whether Republicans and Democrats will be able to reach a compromise deal.

Technical Analysis

USD to CAD is currently testing the nearest support level at 1.2800. RSI is in the oversold territory so the risks of a rebound are high. At the same time, the current downside momentum is very strong.

If USD to CAD manages to settle below the support at 1.2800, it will head towards the next support level at 1.2775. A move below this level will push USD to CAD towards the support at 1.2750.

I’d note that USD to CAD has not visited this area for several years so previous levels may have little impact on today’s trading. The recent trading action indicates that USD to CAD mostly ignores previous levels due to strong momentum.

On the upside, the nearest resistance level for USD to CAD is located at 1.2860. If USD to CAD manages to get above this level, it will head towards the next resistance at 1.2900. There are no major levels between 1.2800 and 1.2900 so USD to CAD may move fast within this range.

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