USD/CAD Daily Forecast – Oil Market Rally Boosts Canadian Dollar

USD/CAD Video 15.02.21.

U.S. Dollar Remains Under Pressure Against Canadian Dollar

USD/CAD is currently moving towards the support at 1.2625 while the U.S. dollar is losing ground against a broad basket of currencies.

The U.S. Dollar Index is currently stuck in the range between the support at 90.30 and the resistance at 90.50. If the U.S. Dollar Index declines below the support at 90.30, it will gain additional downside momentum and move towards the support at the 90 level which will be bearish for USD/CAD.

Today, Canada reported that Housing Starts increased from 229,400 (revised from 228,300) in December to 282,400 in January. Analysts expected that Housing Starts would decline to 190,000 so the report was much better than expected. Meanwhile, Manufacturing Sales grew by 0.9% month-over-month in December compared to analyst consensus which called for growth of 0.6%.

On Monday, Canadian dollar and other commodity-related currencies received support from the continuation of oil market rally. WTI oil managed to get above the psychologically important $60 level amid rising tensions in the Middle East.

While a number of positive catalysts which include Saudi Arabia’s additional production cut and falling crude inventory levels provide material support to oil, the oil market looks a bit overbought in the near term. If oil pulls back from current levels, Canadian dollar may face some pressure.

Technical Analysis

USD to CAD managed to settle below the support at 1.2665 and is trying to get to the test of the next support level which is located at 1.2625.

In case USD to CAD declines below this level, it will head towards the next support which is located at the yearly lows at 1.2590. If the test of this level is successful, USD to CAD will gain additional downside momentum and move towards the next support level at 1.2550.

On the upside, the previous support at 1.2665 will serve as the first resistance level for USD to CAD. If USD to CAD gets above this level, it will head towards the resistance at 1.2700. A move above this level will open the way to the test of the resistance at the 20 EMA at 1.2730.

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