USD/CAD Daily Forecast – Canadian Dollar Tries To Recover After Major Sell-Off

U.S. Dollar Stays Strong Against Canadian Dollar

USD/CAD has recently made an attempt to settle above the resistance at 1.2950 but failed to develop sufficient upside momentum and declined towards 1.2850 while the U.S. dollar was mostly flat against a broad basket of currencies.

The U.S. Dollar Index has recently made an attempt to settle above the resistance at 93.65 but this attempt yielded no results. The nearest support level for the U.S. Dollar Index is located at 93.40. In case the U.S. Dollar Index gets to the test of this level, USD/CAD may find itself under some pressure.

Today, Canada released Retail Sales report for June. The report indicated that Retail Sales increased by 4.2% month-over-month compared to analyst consensus which called for growth of 4.4%. On a year-over-year basis, Retail Sales grew by 6.2%.

It should be noted that Canada’s Retail Sales report had limited impact on USD/CAD dynamics as foreign exchange market traders focused on the dynamics of commodity markets. WTI oil has recently made an attempt to settle below the $62 level which put pressure on commodity-related currencies, including Canadian dollar.

In addition, it looks that some traders got caught in short bets against U.S. dollar, and at least some of the recent upside in USD/CAD could be explained by short covering.

Technical Analysis

USD to CAD is currently trying to stay above the support level at 1.2850. In case this attempt is successful, USD to CAD will move back towards the resistance at 1.2875.

A successful test of the resistance at 1.2875 will open the way to the test of the next resistance level at 1.2920. No important levels were formed between 1.2875 and 1.2920 so this move may be fast. In case USD to CAD settles above 1.2920, it will head towards the resistance at 1.2950.

On the support side, a move below 1.2850 will push USD to CAD towards the support level at 1.2820. If USD to CAD declines below this level, it will head towards the next support level at 1.2790. A move below 1.2790 will open the way to the test of the support at 1.2765.

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