USD/CAD Daily Forecast – Rising Oil Prices Boost The Canadian Dollar

USD/CAD Video 29.04.20.

USD/CAD Continues Its Downside Move As Many Factors Support The Canadian Dollar

USD/CAD broke through the 50 EMA level at 1.3950 and continues its downside move as global market optimism and rising oil prices support the Canadian dollar.

The U.S. has reported its first-quarter GDP results which showed a contraction of 4.8%. This news was taken as bullish by the market since bad economic data increases the likelihood of additional stimulus.

The U.S. Pending Home Sales report was even more shocking since it showed a contraction of 20.8% compared to analyst expectations which called for contraction of just 10%.

Today, the U.S. Federal Reserve will announce its interest rate decision. The rate is widely expected to stay flat so the market will focus on the Fed’s commentary. The Fed has already made huge moves during the current crisis but the market clearly expects additional stimulus in the light of the grim economic data.

Canada will report GDP numbers on Thursday but unfortunately they will not be comparable to U.S. data since the reported data will be for February, when the coronavirus did not yet hit hard the Canadian economy.

Canadian PPI report will be more interesting. Currently, analysts expect that PPI for March has decreased by 0.5% month-over-month and by 0.3% year-over-year.

Technical Analysis

USD/CAD settled below the 50 EMA at 1.3950 and heads towards the recent lows at 1.3850. Currently, the pair is showing a pattern of lower highs, and the trend is to the downside.

In case the test of the support level at 1.3850 is successful, USD/CAD will continue its downside move and head towards the next support level at 1.3750. It remains to be seen whether USD/CAD will be able to get through 1.3850 without any correction since the pair has already made a significant move after it breached the previous support level at the twenty EMA at 1.4050.

On the upside, USD/CAD will have to deal with the above-mentioned level at the 20 EMA as well as with a minor resistance level at 1.4125. The ultimate goal of any major upside move in USD/CAD is the major resistance level at 1.4250 which has already been tested many times. At this point, it is obvious that the pair will need very strong catalysts to get past this level.