USD/CAD Daily Forecast – Strong Oil Supports The Canadian Dollar

USD/CAD Video 14.05.20.

USD/CAD Stays Flat After The Release Of The U.S. Initial Jobless Claims Report

USD/CAD is mixed as the U.S. Dollar Index continues to stay above the 100 level but stronger oil provides support for the Canadian dollar.

The U.S. dollar continues to get support as the market is worried about the pace of the economic recovery while the recent U.S. Initial Jobless Claims report shows that job losses continue.

Roughly 3 million Americans have filed for unemployment benefits in a week, taking the total number of initial filings since the beginning of the coronavirus crisis to more than 36 million.

The market is worried about the pace of the recovery due to both the severity of job losses and the uncertainty regarding the situation on the coronavirus front as countries continue to reopen their economy.

Multiple public health experts have warned against reopening too soon, noting that a hasty reopening could lead to a bigger health crisis and ultimately lead to more economic damage.

Meanwhile, oil is gaining ground after the International Energy Agency has improved its oil demand outlook for 2020, providing support for the Canadian currency.

Today, the factors playing in favor of both the U.S. dollar and the Canadian dollar are balanced so USD/CAD is flat.

Technical Analysis

USD/CAD has tried to test the resistance level at 1.4150 but met material selling activity and pulled back closer to 1.4100. The nearest support for the pair may be seen near the 20 EMA at 1.4050, but I do not think that it will be significant.

The first material support level for the pair is at the 50 EMA at 1.3990. In case USD/CAD settles below this level, it will once again head towards the major support level at 1.3850.

In this case, USD/CAD may also receive support closer to 1.3900, at the lows of the recent pullback.

On the upside, the resistance at 1.4150 is a major obstacle on the pair’s way towards the major resistance level at 1.4250. In case the resistance level at 1.4150 is breached to the upside, USD/CAD will likely gain additional upside momentum and a test of the resistance at 1.4250 may happen soon.