USD/CAD Daily Forecast – Stimulus Hopes Put Pressure On U.S. Dollar

USD/CAD Video 20.10.20.

Canadian Dollar Developed Strong Upside Momentum

USD/CAD is testing the support at 1.3135 as the U.S. dollar is losing ground against a broad basket of currencies.

The U.S. Dollar Index is trying to settle below the support at 93.00 on hopes that U.S. Republicans and Democrats will be able to reach consensus on the new stimulus deal.

U.S. President Donald Trump has already announced that he was willing to get a deal that could be even bigger than the $2.2 trillion deal proposed by Democrats. Currently, stimulus talks continue and their outcome remains uncertain.

If the U.S. Dollar Index declines below the 93 level, it will gain additional downside momentum and head towards the next support at 92.80 which will be bearish for USD/CAD.

Today, U.S. reported that Building Permits increased by 5.2% month-over-month in September while Housing Starts grew by 1.9%. The housing market is showing strength but it remains to be seen whether other segments of the economy will continue to rebound in case the U.S. lawmakers fail to agree to a new round of stimulus.

Technical Analysis

USD to CAD gained strong downside momentum and is trying to settle below the nearest support level at 1.3135. In case this attempt is successful, USD to CAD will continue its downside move and get to the test of the next support level at October lows at 1.3100.

The support at 1.3100 has been tested several times and proved its strength so USD to CAD will likely need additional catalysts to move below this level. If USD to CAD declines below 1.3100, it will head towards the next support level at 1.3050. A move below 1.3050 will open the way to the test of the support at September lows at 1.3000.

On the upside, USD to CAD needs to get back above 1.3135 to have a chance for a rebound. If USD to CAD gains upside momentum, it will move towards the resistance near the 20 EMA at 1.3200.

If USD to CAD settles above the resistance at 1.3200, it will continue its upside move and head towards the test of the next resistance at the 50 EMA near 1.3240.

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