USD/CAD Daily Forecast – Flat Despite Broad Weakness Of U.S. DollarUSD/CAD managed to settle below 1.3800 but received material support at 1.3730.
USD/CAD Video 28.05.20.
Today, the U.S. has provided a number of economic reports. In general, the economic picture continues to look grim.
Initial Jobless Claims report showed that 2.1 million Americans filed for unemployment benefits in a week. Durable Goods Orders declined by 17.2% month-over-month in April. First-quarter GDP Growth Rate was -5%.
However, some hope was provided by Continuing Jobless Claims which declined from 25 million to 21 million.
The new portion of economic data from the U.S. and the continued increase in U.S. – China tensions did not spoil the mood of global markets today. The demand for safe haven assets decreased, and the U.S. dollar found itself under material pressure.
The U.S. Dollar Index, which measures the strength of the U.S. dollar against a broad basket of currencies, has declined closer to 98.5. The U.S. Dollar Index has spent two months between 99 and 101, and a move out of this range could lead to increased downside momentum for the U.S. dollar.
USD/CAD failed to continue the downside move despite the fact that the U.S. dollar is under significant pressure against a broad basket of currencies. The likely reason for this is that the previous downside move was too fast and USD/CAD needs a pause before it will be able to make the next move.
The nearest support level for USD/CAD is located at 1.3730. This level has already been tested several times and has proved its strength. In case USD/CAD manages to get below this level, it will likely gain additional downside momentum and head towards the next support level at 1.3650.
The 20 EMA has recently crossed the 50 EMA to the downside, suggesting the continuation of the downside trend.
On the upside, a minor resistance near 1.3800 was formed. If USD/CAD gets above this level, it will head towards the test of the major resistance level at 1.3850. I’d expect that USD/CAD will attract a lot of interest if it gets back to 1.3850 as this level served as the low end of the two-month trading range between 1.3850 and 1.4250.
For a look at all of today’s economic events, check out our economic calendar.