USD/CAD Daily Forecast – Canadian Dollar Starts The Week On A Strong NoteUSD/CAD did not manage to settle above the resistance at 1.2170 and declined towards the support at 1.2130.
U.S. Dollar Is Losing Ground Against Canadian Dollar
USD/CAD is currently trying to settle back below the support at 1.2130 while the U.S. dollar is losing some ground against a broad basket of currencies.
The U.S. Dollar Index did not manage to settle above the 50 EMA at 90.60 and moved below 90.50. The nearest support level for the U.S. Dollar Index is located at 90.30. If the U.S. Dollar Index gets to the test of this level, USD/CAD will find itself under more pressure.
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Today, Canada reported that Manufacturing Sales declined by 2.1% month-over-month in April compared to analyst consensus which called for a decline of 1.1%. New Motor Vehicle Sales totaled 167,000 in April, mostly in line with the analyst forecast of 170,000.
These reports had little impact on USD/CAD as foreign exchange market traders wait for Retail Sales data from the U.S., which will be published on Tuesday, and Fed Interest Rate Decision, which will be released on Wednesday.
The key question is whether Fed will be less dovish as recent data suggests that inflation is rising faster than previously expected while the economic growth is strong. Any hawkish words from Fed may provide significant support to the American currency, although it remains to be seen whether Fed is ready to change its tone.
USD to CAD failed to settle above the resistance at 1.2170 and is testing the support at 1.2130. In case this test is successful, USD to CAD will move towards the next support which is located at the 20 EMA at 1.2115.
A move below the 20 EMA will push USD to CAD towards the next support at 1.2100. If USD to CAD declines below this level, it will head towards the support at 1.2080.
On the upside, the nearest resistance level for USD to CAD is located at 1.2170. If USD to CAD manages to settle above this level, it will head towards the next resistance at the 50 EMA at 1.2200. A move above 1.2200 will push USD to CAD towards the resistance at 1.2250.
For a look at all of today’s economic events, check out our economic calendar.