USD/CAD Daily Forecast – Canadian Dollar Tries To Gain More Ground Against U.S. Dollar

USD/CAD Video 07.06.21.

U.S. Dollar Is Under Pressure At The Start Of The Week

USD/CAD is trying to settle below the support at 1.2065 while the U.S. dollar is losing ground against a broad basket of currencies.

The U.S. Dollar Index has recently managed to get below the 90 level and is moving towards the next support at 89.75. In case the U.S. Dollar Index gets to the test of this level, USD/CAD will find itself under more pressure.

There are no important economic reports scheduled to be released in the U.S. and Canada today so foreign exchange market traders will focus on general market sentiment.

Riskier currencies are moving higher at the start of the week as traders bet on the robust rebound of the world economy. I’d note that Yellen’s comments about higher interest rates failed to provide any support to the American currency.

While the Fed will have to raise rates at some point in the future, traders believe that interest rates will stay close to zero for many months. However, the situation may change on Thursday when the U.S. will release inflation data for May. Currently, analysts expect that Inflation Rate increased by 4.7% month-over-month in May while Core Inflation Rate grew by 3.4%. If inflation is higher than expected, American currency may get more support.

Technical Analysis

USD to CAD declined below the support at 1.2080 and is testing the next support level at 1.2065. In case USD to CAD settles below this level, it will move towards the next support at 1.2040. The support at 1.2040 has already been tested many times in recent weeks but USD to CAD failed to settle below this level.

A move below 1.2040 will push USD to CAD towards the next support at 1.2000. If USD to CAD gets below 1.2000, it will head towards the support level at 1.1980.

On the upside, the previous support at 1.2080 will serve as the first resistance level for USD to CAD. If USD to CAD gets above this level, it will move towards the 20 EMA at 1.2100. A successful test of the 20 EMA will open the way to the test of the resistance at 1.2130.

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