USD/CAD Daily Forecast – Demand For Safe Haven Assets Boosts U.S. Dollar

USD/CAD Video 15.05.20.

Stronger Oil Fails To Help The Canadian Dollar As Safe Haven Assets Get Support After Another Round Of Poor Economic Data

USD/CAD gained ground despite stronger oil while the U.S. dollar was mixed against a broad basket of currencies.

Today, investors and traders had to digest a flurry of U.S. economic news. The most important economic release of the day was the U.S. Retail Sales report which showed that retail sales declined by 16.4% in April.

Industrial Production and Manufacturing Production reports also painted a gloomy picture as Industrial Production declined by 11.2% month-over-month while Manufacturing Production fell 13.7%.

A glimmer of hope was provided by the preliminary Michigan Consumer Sentiment for May which increased from 71.8 in the previous month to 73.7.

This increase could be explained by the massive government aid which boosted consumer sentiment. In addition, the U.S. economy has started to reopen which should have provided consumers with more confidence about future perspectives.

Interestingly, the U.S. dollar is mostly flat today, and the U.S. Dollar Index stays close to the 100.5 level. There’s a significant resistance level at 101, and any major upside move in USD/CAD will likely require a corresponding move in the U.S. Dollar Index above 101.

Technical Analysis

USD/CAD has settled above the 20 EMA level at 1.4050 and continues its attempts to move higher. Previously, the 20 EMA did not serve as a material level for USD/CAD, but this time the pair seems to have found some support near this level.

The next resistance level for USD/CAD is located at 1.4150. The pair has recently tried to get above it but stronger oil helped the Canadian dollar gain more ground against the U.S. dollar and this attempt failed.

In case USD/CAD manages to settle above 1.4150, it will likely gain additional upside momentum and head towards the major resistance level at 1.4250.

On the support side, the support at the 20 EMA level is followed by the support at the 50 EMA level at 1.3990. In case USD/CAD gets below the 50 EMA level, it will head towards the major support level at 1.3850.

Previously, the pair received some support near 1.3900, so it is possible that such support will once again present itself in case the pair moves towards 1.3850.