USD/CAD Daily Forecast – Strong Oil Provided Support To Canadian Dollar

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Published: Feb 2, 2021, 17:53 UTC

USD/CAD failed to settle above the resistance at 1.2860 and pulled back.

Canadian Dollar Gains Ground Against U.S. Dollar

USD/CAD has recently made another attempt to settle above the resistance at 1.2860 but lost momentum and declined below the support level at 1.2835 while the U.S. dollar gained ground against a broad basket of currencies.

The U.S. Dollar Index has managed to settle above the resistance at 91.10 and is trying to develop additional upside momentum. The next resistance level for the U.S. Dollar Index is located at 91.50. If the U.S. Dollar Index gets to the test of this level, USD/CAD will receive more support.

The U.S. dollar gained momentum against a broad basket of currencies thanks to the weakness of the euro, which found itself under pressure after the release of Euro Area GDP Growth Rate report which indicated that Euro Area GDP declined by 0.7% in the fourth quarter on a quarter-over-quarter basis.

Meanwhile, Canadian dollar received support from strong oil which managed to get to the test of the $55 level. If oil continues its upside move, USD/CAD may find itself under pressure.

Technical Analysis

USD to CAD has recently tried to settle above the resistance at 1.2860 but failed to develop sufficient upside momentum and pulled back. Currently, USD to CAD is trying to settle below the nearest support level at 1.2835.

If USD to CAD manages to settle below this level, it will get to the test of the next support level at the 50 EMA at 1.2805. A move below this level will open the way to the test of the support at 1.2775. If USD to CAD gets below the support at 1.2775, it will test the 20 EMA at 1.2765.

On the upside, USD to CAD needs to get back above 1.2835 to have a chance to develop upside momentum in the near term. If USD to CAD settles above this level, it will head towards the next resistance at 1.2860. A move above the resistance at 1.2860 will open the way to the test of the resistance at 1.2880.

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About the Author

Vladimir Zernovauthor

Vladimir is an independent trader and analyst with over 10 years of experience in the financial markets. He is a specialist in stocks, futures, Forex, indices, and commodities areas using long-term positional trading and swing trading.