USD/CAD Daily Forecast – Stuck Near 1.3200

USD/CAD Video 21.08.20.

Canadian Dollar Continues To Show Strength

USD/CAD has settled near 1.3200 but did not manage to go higher despite the major upside move of the U.S. Dollar Index and weak oil.

The U.S. Dollar Index managed to settle above the 93 level and even tried to get to the test of 93.50 after the release of disappointing Euro Area PMI data. In turn, the U.S. PMI reports were better than expected.

U.S. Manufacturing PMI increased from 50.9 in July to 53.6 in August compared to analyst consensus of 51.9. U.S. Services PMI grew from 50 to 54.8. Analysts expected that Services PMI would increase to 51.

Meanwhile, Canada provided Retail Sales reports for June. Retail Sales increased by 23.7% month-over-month compared to analyst consensus which called for growth of 24.5%. At the same time, the May data was revised from growth of 18.7% to growth of 21.2%. On a year-over-year basis, Retail Sales increased by 3.8%.

In recent days, Canadian dollar managed to show considerable strength against the U.S. dollar as USD/CAD mostly remained below 1.3200 despite the material rebound of the U.S. Dollar Index and complete lack of momentum on the oil price front.

At this point, the main risk for USD/CAD bears is the continuation of the broader U.S. dollar upside. In case the U.S. Dollar Index manages to get above the resistance at 93.50, USD/CAD will likely gain more upside momentum.

Technical Analysis

USD to CAD has made another attempt to settle above the nearest resistance level at 1.3235 but failed to get enough upside momentum and declined towards 1.3200.

In case USD to CAD is able to get above 1.3235, it will head towards the next resistance at the 20 EMA at 1.3285. A move above the 20 EMA will open the way to the test of the resistance at 1.3330.

On the support side, the nearest material support level for USD to CAD is still located at the recent lows at 1.3135. If USD to CAD manages to settle below this level, it will gain more downside momentum and head towards the next support level at 1.3080.

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