USD/CAD Daily Forecast – Canadian Dollar Remains Under Pressure As Oil Moves To New Lows

U.S. Dollar Is Gaining Ground Against Canadian Dollar

USD/CAD continues its attempts 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 stuck in the range between the support at 95.75 and the resistance at 96 after an unsuccessful test of the resistance at the yearly highs at 96.25. In case the U.S. Dollar Index gets above the 96 level, it will move back towards 96.25 which will be bullish for USD/CAD.

Today, Canada reported that Retail Sales declined by 0.6% month-over-month in September compared to analyst consensus which called for a decline of 1.7%. On a year-over-year basis, Retail Sales grew by 4.8% compared to analyst forecast of 6%.

Foreign exchange market traders also focused on the dynamics of commodity markets. WTI oil found itself under strong pressure on fears about lockdowns in Europe. Austria has already announced a full lockdown from next Monday, and Germany may follow suit.

Currently, WTI oil is trying to settle below $75.50. In case this attempt is successful, WTI oil will move towards the psychologically important $75 level which will be bearish for commodity-related currencies, including Canadian dollar.

Technical Analysis

USD to CAD has recently made another attempt to settle above the resistance at 1.2650 but lost momentum and pulled back. If USD to CAD manages to settle above this level, it will get to the test of the next resistance at 1.2675. A successful test of the resistance at 1.2675 will push USD to CAD towards the next resistance at 1.2700.

In case USD to CAD gets above 1.2700, it will head towards the resistance at 1.2730. A move above this level will open the way to the test of the resistance at 1.2760.

On the support side, the nearest support level for USD to CAD is located at 1.2625. A move below this level will push USD to CAD towards the support level at 1.2590. In case USD to CAD gets below 1.2590, it will head towards the support at 1.2550.

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