USD/CAD Daily Forecast – Canadian Dollar Rallies As Oil Continues To Rebound

U.S. Dollar Is Under Strong Pressure Against Canadian Dollar

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

The U.S. Dollar Index is trying to get above the resistance at 96.50. In case the U.S. Dollar Index settles above this resistance level, it will move towards 96.70 which will be bullish for USD/CAD.

Today, foreign exchange market traders focus on commodity markets and the dynamics of Treasury yields.

WTI oil continued to rebound as worries about the new variant of coronavirus decreased. The strong move in the oil markets provided material support to commodity-related currencies, including Canadian dollar.

Meanwhile, the yield of 2-year Treasuries moved to yearly highs. The yields of 10-year Treasuries and 30-year Treasuries lack dynamics today, so the market expects that Fed will raise rates aggressively and put pressure on inflation in the longer-term. Higher yields provide support to the American currency. However, the U.S. dollar found itself under pressure against Canadian dollar as WTI oil moved from the $66 level to the $73 level in just two trading sessions.

Technical Analysis

USD to CAD managed to settle below the support at 1.2680 and is testing the next support level at 1.2650. In case this test is successful, USD to CAD will move towards the next support level at 1.2625.

A move below the support at 1.2625 will lead to the test of the next support level which is located at the 50 EMA at 1.2615. If USD to CAD gets below the 50 EMA, it will gain additional downside momentum and head towards the support level at 1.2590.

On the upside, the previous support at 1.2680 will serve as the first resistance level for USD to CAD. If USD to CAD gets back above this level, it will move towards the resistance which is located at the 20 EMA at 1.2700. A successful test of the resistance at the 20 EMA will push USD to CAD towards the next resistance level at 1.2730.

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