USD/CAD Daily Forecast – Canadian Dollar Rallies As WTI Oil Returns To The $70 Level

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

USD/CAD is currently trying to settle below the support at 1.2560 while the U.S. dollar is losing ground against a broad basket of currencies.

The U.S. Dollar Index declined below the 93 level and is trying to settle below the support at 92.80. In case this attempt is successful, the U.S. Dollar Index will move towards the support at 92.40 which will be bearish for USD/CAD.

Today, foreign exchange market traders focused on the developments in commodity markets. WTI oil managed to gain strong upside momentum and returned to the $70 level which provided significant support to commodity-related currencies including Canadian dollar.

Meanwhile, the yield of 10-year Treasuries has moved from 1.20% to 1.29% as bond traders sold U.S. government bonds. This move indicates that demand for safe-haven assets is decreasing, which is bearish for the American currency that has recently enjoyed strong support due to fears about the spread of the Delta variant of coronavirus.

Technical Analysis

USD to CAD gained strong downside momentum and is trying to settle below the support at 1.2560. RSI is in the moderate territory, and there is enough room to gain additional downside momentum in case the right catalysts emerge.

In case USD to CAD manages to settle below the support at 1.2560, it will move towards the next support level at 1.2540. A successful test of this level will push USD to CAD towards the next support at 1.2520. The 20 EMA is in the nearby so USD to CAD may get strong support near this level. If USD to CAD declines below the support at 1.2520, it will head towards the support level at 1.2500.

On the upside, the nearest resistance level for USD to CAD is located at 1.2590. A successful test of this level will open the way to the test of the resistance at 1.2625. In case USD to CAD gets above 1.2625, it will head towards the next resistance at 1.2650.

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