USD/CAD Daily Forecast – Support At 1.2930 In Sight

USD/CAD Video 01.12.20.

U.S. Dollar Remains Under Serious Pressure

USD/CAD is moving towards the support at 1.2930 as the U.S. dollar remains under serious pressure against a broad basket of currencies.

The U.S. Dollar Index has recently managed to get below the support at 91.50 and gained additional downside momentum. The next material support level for the U.S. Dollar Index is located at 91. If the U.S. Dollar Index gets to the test of this level, USD/CAD will find itself under additional pressure.

Today, foreign exchange market traders had a chance to evaluate final Manufacturing PMI numbers from U.S. and Canada. In the U.S., Manufacturing PMI increased from 53.4 in October to 56.7 in November, fully in line with the analyst consensus. In Canada, Manufacturing PMI increased from 55.5 to 55.8 compared to analyst forecast of 55.3.

In addition to Manufacturing PMI report, Canada provided third-quarter GDP Growth Rate report. On a quarter-over-quarter basis, GDP increased by 8.9% in the third quarter compared to analyst forecast which called for growth of 10%.

Tomorrow, traders will focus on the U.S. ADP Employment Change report for November which is expected to show that private businesses hired 400,000 workers in November.

Analyst expectations are optimistic despite the surge in the number of new coronavirus cases in November, and it remains to be seen whether the U.S. job market remained strong in this environment.

Technical Analysis

USD to CAD managed to settle below the support at 1.2985 and developed strong downside momentum. Currently, USD to CAD is trying to get to the test of the next support level at the recent lows at 1.2930.

In case USD to CAD declines below this level, it will head towards the next support level at 1.2900. A move below the support at 1.2900 will push USD to CAD towards the next support at 1.2860. It should be noted that USD to CAD has not visited this area since 2018 so previous levels may have little relevance for today’s trading.

On the upside, USD to CAD needs to get above the 1.2985 – 1.3000 resistance area to have a chance to develop upside momentum. If USD to CAD settles above the resistance at 1.3000, it will head towards the 50 EMA at 1.3050 but may also face resistance at 1.3025 along the way.

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