USD/CAD Daily Forecast – Resistance At 1.2720 Stays Strong

USD/CAD Video 08.01.21.

Canadian Dollar Is Mostly Flat Against U.S. Dollar

USD/CAD continues its attempts to get above the nearest resistance level at 1.2720 while the U.S. dollar is gaining some ground against a broad basket of currencies.

The U.S. Dollar Index received support near 89.75 and is moving towards the 90 level. If the U.S. Dollar Index settles above 90, it will have an opportunity to test the resistance at the 20 EMA at 90.15 which will be bullish for USD/CAD.

Today, the U.S. provided Non Farm Payrolls report which indicated that the economy lost 140,000 jobs in December. Meanwhile, Unemployment Rate remained unchanged at 6.7% while analysts expected that it would increase to 6.8%.

In Canada, the Employment Change report showed that the economy lost 62,600 jobs in December. Canada’s Unemployment Rate increased from 8.5% to 8.6%.

Employment reports from U.S. and Canada indicate that the second wave of the virus puts significant pressure on the job market. At this point, foreign exchange market traders do not look concerned about the situation in the job market as they believe that Democrats will soon introduce a new stimulus package.

Technical Analysis

USD to CAD remains stuck in the range between the support level at 1.2665 and the resistance level at 1.2720. USD to CAD moved back and forth within this range in recent trading sessions but failed to gain any momentum.

In case USD to CAD manages to settle above the resistance at 1.2720, it will have a chance to gain upside momentum and get to the test of the next resistance level at 1.2750.

A successful test of this level will push USD to CAD towards the resistance at the 20 EMA at 1.2765. The next resistance level is located at 1.2775 so USD to CAD will likely face strong resistance in the 1.2765 – 1.2775 area.

On the support side, a move below 1.2700 will push USD to CAD towards the nearest material support level at 1.2665. This support level has already been tested several times and proved its strength.

If USD to CAD declines below this level, it will gain downside momentum and move towards the next support level at 1.2625.

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