USD/CAD Daily Forecast – Support At 1.3200 In Sight

USD/CAD Video 08.10.20.

Canadian Dollar Gains Ground On Stronger Oil

USD/CAD managed to settle below the 50 EMA at 1.3280 and is testing the next support level at 1.3235 as oil is gaining ground amid fears that oil workers’ strike will escalate and lead to tighter supply in the upcoming weeks.

The U.S. Dollar Index, which measures the strength of the U.S. dollar against a broad basket of currencies, failed to settle below 93.50 and rebounded closer to the 50 EMA at 93.65.

If the U.S. Dollar Index manages to get below 93.50, it will have a chance to develop additional downside momentum which will be bearish for USD/CAD.

Today, U.S. reported that Initial Jobless Claims increased from 837,000 to 840,000 while Continuing Jobless Claims declined from 11.77 million to 10.98 million.

These reports had little impact on currency markets as traders preferred to focus on coronavirus aid package negotiations.

Republicans and Democrats look ready to negotiate a $25 billion aid package to support airlines. Recently, U.S. President Donald Trump stated that current discussions also included a next round of $1,200 stimulus checks.

Stimulus talks provided some support to the U.S. dollar against a broad basket of currencies but the rally in oil prices has finally managed to boost the Canadian dollar, putting pressure on USD/CAD.

Technical Analysis

USD to CAD moved below the 50 EMA at 1.3280 and got to the test of the support level at 1.3235.

If USD to CAD manages to settle below the support level at 1.3235, it will head towards the major support level at 1.3200. Most likely, USD to CAD will need additional catalysts to get below 1.3200.

If this happens, USD to CAD will gain additional downside momentum and move towards the next support level at 1.3175. A move below 1.3175 will open the way to the test of another significant support level at 1.3135.

On the upside, the previous support at the 50 EMA at 1.3280 will serve as the first resistance level for USD to CAD. If USD to CAD settles above this level, it will head towards the next resistance level at the recent highs at 1.3330.

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