USD/CAD Daily Forecast – Resistance At 1.3250 Proves Its StrengthUSD/CAD did not manage to settle above the 50 EMA and returned to the nearest support at 1.3200.
USD/CAD Video 17.09.20.
U.S. Dollar Failed To Maintain Its Upside Momentum
USD/CAD failed to settle above the 50 EMA at 1.3250 and declined towards 1.3200 as the U.S. dollar found itself under pressure against a broad basket of currencies.
Earlier, U.S. Dollar Index made an attempt to settle above the resistance level at 93.50 as traders started to bet on the American currency after the U.S. Fed did not promise additional asset purchases.
However, the U.S. dollar lost steam, and the U.S. Dollar Index declined towards the 20 EMA at 93.10. A move below the 20 EMA will likely lead to increased downside momentum which will be bearish for USD/CAD.
Today, U.S. reported that Initial Jobless Claims decreased to 860,000 while Continuing Jobless Claims declined to 12.6 million. While Continuing Jobless Claims report was better than expected, the general situation in the U.S. job market remains challenging.
Meanwhile, Canada’s ADP Employment Change report showed that private businesses slashed 205,400 jobs in August. This is the best report since the beginning of the crisis but it is clear that Canada’s job market is far from recovery.
At this point, it looks like markets are not sure about the correct interpretation of Fed Chair Powell’s comments which leads to significant volatility of the U.S. dollar.
USD to CAD faced significant resistance at the 50 EMA at 1.3250 and fell back towards the nearest support level at 1.3200.
If USD to CAD manages to stay above this support level, it will have a chance to get to another test of the 50 EMA level. A move above the 50 EMA will lead to increased upside momentum, and USD to CAD will head towards the next resistance level at 1.3330. RSI is at moderate levels so there is plenty of room to gain more momentum in case the right catalysts emerge.
On the support side, a move below 1.3200 will lead to a test of the next support level at the 20 EMA at 1.3170.
If USD to CAD manages to settle below the 20 EMA, it will gain downside momentum and head towards the next support level at the recent lows at 1.3135.
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