USD/CAD Daily Forecast – Support At 1.3500 In SightUSD/CAD failed to stay in the range between the 20 EMA and the 50 EMA and returned back to the previous trading range between support at 1.3500 and the 20 EMA.
USD/CAD Video 15.07.20.
Vaccine Hopes Boost Demand For Riskier Assets Like Canadian Dollar
USD/CAD returned back to the previous trading range between the support level at 1.3500 and the resistance level at the 20 EMA at 1.3585 as the U.S. dollar lost ground against a broad basket of currencies amid hopes for COVID-19 vaccine.
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The U.S. Dollar Index continued its downside move and tested the 96 level. Currently, the U.S. Dollar Index is located not far from lows reached in June. In case the U.S. Dollar Index settles below these lows, USD/CAD will find itself under increased pressure.
The Bank of Canada decided to leave its interest rate unchanged at 0.25%, in line with analysts’ consensus. The central bank stated that economic growth would not return to pre-pandemic levels until 2022 which is not surprising as economic growth forecasts have been steadily revised to the downside since the beginning of the pandemic.
On a year-over-year basis, the situation continues to look grim as Industrial Production declined by 10.8% while Manufacturing Production declined by 11.2%.
Currently, markets are driven by hopes for a vaccine. If this optimism prevails, riskier assets like the Canadian dollar will get additional support, and USD/CAD may fall below the support level at 1.3500.
Meanwhile, oil continues its attempts to settle above the nearest resistance at $41.50. A move above this level will be bearish for USD/CAD.
USD to CAD failed to stay above the 20 EMA and moved back into the previous trading range. The nearest support level for USD to CAD is located at 1.3500. This is a very important level which has been tested several times in recent months.
A move below 1.3500 will likely lead to a sell-off as it will signal that USD to CAD is ready to return to the downside trend. In this scenario, USD to CAD may quickly find itself at the next support level at 1.3440.
On the upside, the 20 EMA at 1.3585 is the first resistance level for USD to CAD, followed by resistance at the 50 EMA at 1.3650.
For a look at all of today’s economic events, check out our economic calendar.