USD/CAD Daily Forecast – Resistance At 1.2880 Stays Strong

USD/CAD Video 28.01.21.

U.S. Dollar Gains Some Ground Against Canadian Dollar

USD/CAD faced resistance near 1.2880 and declined towards 1.2800 while the U.S. dollar lost some ground against a broad basket of currencies.

The U.S. Dollar Index failed to settle above the resistance at the 50 EMA at 90.80 and gained some downside momentum. Currently, the U.S. Dollar Index is trying to get below the nearest support level at 90.50. If the U.S. Dollar Index declines below this level, it will move towards the support at the 20 EMA at 90.35 which will be bearish for USD/CAD.

Today, the U.S. reported that Initial Jobless Claims declined from 914,000 (revised from 900,000) to 847,000 compared to analyst consensus of 875,000. Meanwhile, Continuing Jobless Claims decreased from 4.97 million (revised from 5.05 million) to 4.77 million.

The reports indicated that the situation in the job market began to improve and provided material support to riskier currencies on the foreign exchange market.

The U.S. also reported that fourth-quarter GDP grew by 4% quarter-over-quarter, fully in line with analyst consensus. New Home Sales increased by 1.6% month-over-month in December while analysts expected that they would grow by 1.9%. These reports did not have a major impact on the trading dynamics as traders focused on U.S. employment reports.

Technical Analysis

USD to CAD is currently trying to stay above the support level at the 50 EMA at 1.2800. If this attempt is successful, USD to CAD will move towards the nearest resistance level at 1.2835.

A successful test of this level will open the way to the test of the resistance at 1.2860. If USD to CAD manages to settle above the resistance at 1.2860, it will head towards the next resistance at 1.2880.

On the support side, a move below the support at the 50 EMA at 1.2800 will push USD to CAD towards the next support at 1.2775. If USD to CAD declines below this level, it will head towards the support at 1.2750. A move below this level will open the way to the test of the support at the 20 EMA at 1.2740.

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