USD/CAD Daily Forecast – Canadian Dollar Retreats As Commodity Markets Fall

U.S. Dollar Stays Strong Against Canadian Dollar

USD/CAD is currently trying to settle above the resistance at 1.2765 while the U.S. dollar is gaining ground against a broad basket of currencies.

The U.S. Dollar Index has managed to settle above the resistance at 92.80. The next resistance level for the U.S. Dollar Index is located at 93.10. In case the U.S. Dollar Index gets to the test of this level, USD/CAD will get more support.

Today, foreign exchange market traders focused on dynamics of commodity markets which found themselves under huge pressure amid virus fears.

WTI oil gained strong downside momentum after OPEC+ reached a deal on production cuts. Currently, WTI oil is trying to settle below the $67 level. In case this attempt is successful, it will gain additional downside momentum which will be bearish for commodity-related currencies including Canadian dollar.

I’d also note that the yields of 10-year Treasuries have moved to the 1.20% level which indicates that demand for safe-haven assets is very strong. Typically, lower Treasury yields serve as a bearish catalyst for the American currency, but the U.S. dollar also benefits from the flow of money into safe-haven assets.

Technical Analysis

USD to CAD gained strong upside momentum and is currently trying to settle above the resistance at 1.2765. In case this attempt is successful, USD to CAD will move to another test of the resistance level at 1.2800.

A move above the resistance at 1.2800 will open the way to the test of the resistance at 1.2835. If USD to CAD manages to settle above this level, it will head towards the next resistance at 1.2875.

On the support side, a move below 1.2765 will push USD to CAD towards the support level which is located at 1.2740. RSI is in the overbought territory, so USD to CAD will have a good chance to gain downside momentum in case the right catalysts emerge. A successful test of the support at 1.2740 will push USD to CAD towards the next support at 1.2710.

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