USD/CAD Daily Forecast – Resistance At 1.3235 Stays Strong

USD/CAD Video 25.08.20.

Strong Oil Provides Support To Canadian Dollar

USD/CAD continues its attempts to settle above 1.3200 as the U.S. dollar is losing ground against a broad basket of currencies while WTI oil tries to settle above the $43 level.

The U.S. Dollar Index made an attempt to get below the 93 level as traders favored riskier assets following the news that U.S. and China confirmed that Phase 1 of the trade deal was progressing well.

However, a major increase in U.S. government bond yields, which was especially pronounced in 10-year bonds, provided some support to the American currency, and the U.S. Dollar Index returned back above 93.

Today, the U.S. has reported New Home Sales data for July. New Home Sales increased by 13.9% compared to analyst consensus which called for growth of just 1.3%.

It looks like low interest rate environment and the desire to improve living conditions amidst the challenges posed by the coronavirus pandemic are boosting sales of new homes.

Meanwhile, the U.S. consumer confidence declined once again as consumers were worried about economic prospects and job security. It remains to be seen when the decline in U.S. consumer confidence will put pressure on retail sales, but the slowdown in retail sales growth is an increasingly likely scenario.

Technical Analysis

USD to CAD failed to settle above the nearest resistance level at 1.3235 but continues to trade near 1.3200. In case USD to CAD manages to settle above the major resistance at 1.3235, it will head towards the 20 EMA at 1.3260.

A move above the 20 EMA will be a major positive development for USD to CAD bulls as it will signal that USD to CAD is ready to develop material upside momentum.

In this scenario, USD to CAD will have good chances to get to the test of the next resistance level at 1.3330.

On the support side, USD to CAD has recently recieved some support near 1.3175. A move below this level will open the way to the test of the significant support level at the recent lows at 1.3135.

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