USD/CAD Daily Forecast – Canadian Dollar Rebounds After Yesterday’s Sell-Off

USD/CAD Video 05.01.21.

U.S. Dollar Is Losing Ground Against Canadian Dollar

USD/CAD is currently trying to settle below the support level at 1.2700 while the U.S. dollar is losing ground against a broad basket of currencies.

The U.S. Dollar Index managed to get below the support at 89.75 and is moving towards the next support level at 89.40. If the U.S. Dollar Index gets below the support at 89.40, it will gain additional downside momentum which will be bearish for USD/CAD.

Today, foreign exchange market traders focus on the runoff elections in Georgia. If Democrats win both seats, they will take control of the Senate. Democrats have always wanted to increase the size of the stimulus packages so this scenario is bearish for the American currency.

Today, U.S. reported that ISM Manufacturing PMI increased from 57.5 in November to 60.7 in December while analysts believed that it would decline to 56.6. The manufacturing segment remains strong despite the second wave of the virus which is good for riskier assets.

Canadian dollar is also supported by oil’s rally. Russia has reportedly agreed not to increase production in February, and WTI oil tested the psychologically important $50 level.

Technical Analysis

USD to CAD gained downside momentum and is trying to settle below the support level at 1.2700. RSI is in the moderate territory so there is plenty of room to gain additional downside momentum in case the right catalysts emerge.

In case USD to CAD settles below 1.2700, it will head towards the next support level which is located at the recent lows at 1.2665. A move below this level will open the way to the test of the next support at 1.2625. It should be noted that USD to CAD did not visit this territory for several years so previous levels may not be relevant for today’s trading.

On the upside, the nearest resistance level for USD to CAD is located at 1.2720. If USD to CAD gets above this level, it will head towards the resistance at 1.2750. A move above 1.2750 will push USD to CAD towards the resistance at 1.2775. In case USD to CAD gets above this level, it will move towards the resistance at the 20 EMA near 1.2800.

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