USD/CAD Daily Forecast – Consolidation Near 1.3500USD/CAD attempts to settle above 1.3500 despite broad U.S. dollar weakness.
USD/CAD Video 04.06.20.
U.S. Dollar Gets Some Support Against The Canadian Dollar
USD/CAD is trying to rebound despite broad weakness of the U.S. dollar. The U.S. Dollar Index, which measures the strength of the American currency against a broad basket of currencies, continues the downside move and attempts to settle below 97.
Today, the European Central Bank has increased its asset-buying program by 600 billion euros and provided material support for the European currency. The optimism about additional monetary stimulus supported riskier assets.
The U.S. Initial Jobless Claims declined to 1.9 million but remain at very high levels. Interestingly, the unexpected increase in U.S. Continuing Jobless Claims was not able to provide additional support to the U.S. dollar as a safe haven asset of last resort. Instead, precious metals benefited from the disappointing employment data.
Oil is losing momentum on doubts about the extension of current production cuts, which may put pressure on the Canadian dollar. However, it is likely that the previous downside move in USD/CAD was so fast that it’s time for some consolidation.
Previously, I noted that if USD/CAD was able to settle below 1.3500, it would move towards the support level at 1.3440. Currently, it looks like USD/CAD is getting support just below 1.3500, so sellers will have to work through this support before USD/CAD could continue its downside move towards 1.3440.
In this scenario, a successful test of 1.3440 will open the way to the next support level at 1.3335. For this scenario to be realized in practice, the U.S. Dollar Index should continue its downside move while oil prices should remain at current levels or experience additional upside.
The nearest resistance for USD/CAD is located at the high point of the recent rebound attempt at 1.3570. In case USD/CAD gets above this level, it will head towards the major resistance level at 1.3730.
The previous downside move which took USD/CAD from 1.3800 to 1.3500 was fast, and no material levels were formed between 1.3570 and 1.3730. However, this does not guarantee that a move above 1.3570 will lead to an upside momentum of a similar force.
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