USD/CAD Daily Forecast – Canadian Dollar Retreats After Weak GDP Report

U.S. Dollar Gains Ground Against Canadian Dollar

USD/CAD continues its attempts to settle above the resistance at 1.2625 while the U.S. dollar is moving higher against a broad basket of currencies.

The U.S. Dollar Index has recently made an attempt to settle below the 50 EMA at 92.45 but lost momentum and rebounded towards 92.70. The nearest resistance level for the U.S. Dollar Index is located at the 20 EMA at 92.80. In case the U.S. Dollar Index moves above this level, it will head towards the resistance at 93.10 which will be bullish for USD/CAD.

Today, foreign exchange market traders had a chance to take a look at Case-Shiller Home Price report from U.S. which indicated that home prices increased by 19.1% month-over-month in June compared to analyst consensus which called for growth of 18.5%.

Meanwhile, CB Consumer Confidence report indicated that Consumer Confidence declined from 129.1 in July to 113.8 in August compared to analyst consensus of 124. The report showed that the recent surge in the number of new coronavirus cases has already put pressure on customers’ mood.

Canada released second-quarter GDP Growth Rate report which showed that GDP declined by 0.3% quarter-over-quarter while analysts expected that it would grow by 0.6%. Not surprisingly, weak GDP report put some pressure on the Canadian dollar.

Technical Analysis

USD to CAD is currently trying to settle above the resistance at 1.2625. In case this attempt is successful, it will get to another test of the next resistance level which is located at 1.2650.

A move above the resistance at 1.2650 will open the way to the test of the resistance at 1.2685. If USD to CAD manages to settle above this level, it will head towards the next resistance at the recent highs at 1.2710.

On the support side, the nearest support level for USD to CAD is located at 1.2590. If USD to CAD gets below this level, it will move towards the 50 EMA at 1.2555. A successful test of the support at the 50 EMA will push USD to CAD towards the next support level at 1.2530.

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