USD/CAD Daily Forecast – Stronger Oil Helps The Canadian DollarUSD/CAD fell back below 1.4000 as oil managed to rebound after sell-off on Friday.
USD/CAD Video 25.05.20.
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Oil’s comeback after the sell-off on Friday had a material impact on USD/CAD dynamics, and the pair returned back under 1.4000.
The U.S. dollar is flat against a broad basket of currencies. The U.S. Dollar Index continues to stay in the range between 99 and 101, and a move out of this range will lead to increased momentum in USD/CAD.
I’d note that the U.S. Dollar Index has been range-bound for two months and it will need material catalysts to move out of this range.
Currently, there is a balance between optimism about the reopening of the world economy and worries about the pace of the economic recovery, so the U.S. dollar cannot make a significant move in any direction.
Once this balance is broken, we’ll see more decisive action in USD/CAD.
The technical picture for USD/CAD is still rather bearish since each attempt to rebound from the major support level at 1.3850 is met at a lower level. This time, the rebound from the support at 1.3850 was met near 1.4050.
This level will serve as the first material resistance level for USD/CAD. In case USD/CAD manages to settle above this level, it will head towards the next resistance at the high of the previous rebound at 1.4150.
A move above 1.4150 will be bullish for USD/CAD since the two previous rebounds were stopped at this level. In this case, traders can count on a test of the major resistance level at 1.4250.
On the support side, USD/CAD will have to deal with the major support level at 1.3850. There are no material support levels between 1.3850 and 1.4000, although some support may be seen closer to 1.3900.
USD/CAD will likely gain major downside momentum in case it settles below 1.3850. In this scenario, it could quickly get to the next support level at 1.3750.
From a big picture point of view, USD/CAD remains range-bound. It will certainly need additional catalysts to get out of the current trading range.
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