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

USD/CAD Video 16.09.20.

U.S. Dollar Is Losing Ground Ahead Of Fed Interest Rate Decision

USD/CAD is testing the support at the 20 EMA at 1.3165 as the U.S. dollar is losing ground against a broad basket of currencies while WTI oil is trying to get to the $40 level.

The U.S Dollar Index is volatile today ahead of U.S. Fed Interest Rate Decision. It has already tested the minor support level at 92.80 and also tried to get above the 20 EMA at 93.10.

Most likely, the U.S. Dollar Index will fail to make any decisive moves before the Fed Interest Rate announcement and the subsequent press conference.

Today, the U.S. has provided Retail Sales data for August which indicated that Retail Sales continued to grow but the pace of this growth was slowing down.

The U.S. economy clearly needs another round of stimulus, and there are indications that Democrats and Republicans may be willing to reach consensus on a $1.5 trillion coronavirus aid package deal.

In case the U.S. lawmakers manage to implement a new round of stimulus, the U.S. dollar will get additional support which will be bullish for USD/CAD.

Meanwhile, traders will focus on Fed’s commentary about the potential trajectory of U.S. interest rates. If the Fed is dovish enough, USD/CAD will get below the 20 EMA and may develop significant downside momentum.

Technical Analysis

USD to CAD is currently trying to settle below the nearest support at the 20 EMA at 1.3165. If this attempt is successful, USD to CAD will head towards the next support level at 1.3135.

A move below the support at 1.3135 will open the way to the test of the next major support level at 1.3050. No material levels were formed between 1.3050 and 1.3135 so this move may be fast.

On the upside, the nearest resistance level for USD to CAD is still located at 1.3200. If USD to CAD manages to settle above this level, it will gain more upside momentum and get to the test of the next resistance at 1.3235. The 50 EMA is in the nearby so this resistance level is set to be strong.

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