USD/CAD Daily Forecast – Resistance At 1.2730 Stays Strong

Canadian Dollar Is Mostly Flat Against U.S. Dollar

USD/CAD has recently made an attempt to settle above the resistance at 1.2730 but failed to develop sufficient upside momentum and pulled back towards 1.2710 while U.S. dollar remained mostly flat against a broad basket of currencies.

The U.S. Dollar Index is currently trying to settle below 96.25. In case the U.S. Dollar Index manages to settle below this level, it will head towards the support at 96 which will be bearish for USD/CAD.

Today, foreign exchange market traders focused on inflation data from U.S. Inflation Rate increased by 6.8% year-over-year in November, while Core Inflation Rate grew by 4.9%. Both reports were in line with analyst expectations.

The reaction to the reports was rather nervous, and it looks that foreign exchange market traders were a bit confused. On the one hand, inflation has not been at these levels for decades. On the other hand, the reports met analyst expectations, and Inflation Rate did not go above the 7% level.

At this point, it looks that traders will take a pause and wait until the next week before making significant moves. However, it should be noted that Treasury yields are moving lower, which may serve as a bearish catalyst for the American currency.

Technical Analysis

USD to CAD faced resistance near 1.2730 and pulled back towards the support level at 1.2710. In case USD to CAD manages to settle back below this level, it will get to the test of the 20 EMA at 1.2695.

If USD to CAD declines below 1.2695, it will move towards the support at 1.2680. A successful test of this level will push USD to CAD towards the support at 1.2650. In case USD to CAD moves below 1.2650, it will head towards the 50 EMA at 1.2625.

On the upside, a successful test of the resistance at 1.2730 will push USD to CAD towards the next resistance level which is located at 1.2760. If USD to CAD climbs above this level, it will head towards the resistance at 1.2780.

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