USD/CAD Daily Forecast – Resistance At 1.2650 In Sight

Canadian Dollar Remains Under Pressure Against U.S. Dollar

USD/CAD is trying to get to the test of the resistance level at 1.2650 while the U.S. dollar is gaining ground against a broad basket of currencies.

The U.S. Dollar Index has recently managed to get above the resistance at 93.10 and is trying to develop additional upside momentum. If this attempt is successful, the U.S. Dollar Index will get to the test of the resistance at yearly highs at 93.40 which will be bullish for USD/CAD.

Today, Canada reported that Inflation Rate increased by 0.6% month-over-month in July compared to analyst consensus which called for growth of 0.3%. On a year-over-year basis, Inflation Rate increased by 3.7% compared to analyst consensus of 3.4%. Core Inflation Rate increased by 3.3% year-over-year.

In the U.S., foreign exchange market traders had a chance to take a look at Building Permits and Housing Starts reports. Building Permits increased by 2.6% month-over-month in July while Housing Starts declined by 7%.

Traders also kept an eye on the developments in commodity markets. WTI oil made an attempt to settle back above the $67 level but lost momentum as EIA Weekly Petroleum Status report indicated that domestic oil production increased from 11.3 million barrels per day (bpd) to 11.4 million bpd. Currently, WTI oil is trying to settle below the $66 level. If WTI oil manages to settle below this level, it will gain additional downside momentum and head towards the $65 level which will be bearish for commodity-related currencies, including Canadian dollar.

Technical Analysis

USD to CAD managed to get above the resistance at 1.2625 and is trying to get above this next resistance level at 1.2650. In case this attempt is successful, USD to CAD will head towards the resistance at 1.2685.

A move above 1.2685 will open the way to the test of the resistance at 1.2710. In case USD to CAD gets above 1.2710, it will move towards the next resistance level at 1.2730.

On the support side, a move below 1.2625 will push USD to CAD towards the support at 1.2590. In case USD to CAD declines below this level, it will head towards the next support level which is located at the 20 EMA at 1.2550. A move below the 20 EMA will open the way to the test of the support at 1.2500, although USD to CAD may also get some support near 1.2530.

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