USD/CAD Daily Forecast – Support At 1.3500 Was Tested Again

USD/CAD Video 16.07.20.

Canadian Dollar Failed To Develop More Upside Momentum

USD/CAD is still located in the range between the support at 1.3500 and the resistance at the 20 EMA at 1.3580 after an unsuccessful attempt to settle below 1.3500.

The U.S. dollar is flat against a broad basket of currencies after the release of U.S. economic data, and the U.S. Dollar Index has settled near the 96 level.

Initial Jobless Claims report indicated that 1.3 million Americans filed for unemployment benefits in a week. Currently, Initial Jobless Claims are stuck at high levels.

At the same time, Continuing Jobless Claims declined to 17.3 million which is a healthy sign that the job situation has started to improve. It remains to be seen whether the reintroduction of certain virus containment measures in some U.S. states will have a visible impact on country-wide job trends.

In Canada, ADP Employment Change report for June showed that private businesses added 1.05 million jobs in June as the economy reopened.

U.S. Retail Sales gained 7.5% month-over-month in June as consumers were supported by generous unemployment benefits. The key question for the market is what will happen when the current support ends.

China may have just provided an answer to this question as its retail sales remained under pressure in June on a year-over-year basis despite the fact that China has managed to contain the virus several months ago.

Technical Analysis

USD to CAD did not manage to settle below the support level at 1.3500 and remains in the range between 1.3500 and the 20 EMA at 1.3580.

A move below the support at 1.3500 will likely lead to a rapid sell-off since traders had plenty of time to build long positions near this level so their protective stops are likely located somewhere below 1.3500.

In this scenario, USD to CAD will quickly head towards the next support level at 1.3440. A move below 1.3440 will open the way to the next support at 1.3360.

On the upside, the first important resistance level for USD to CAD is located at the 20 EMA at 1.3580, followed by the major resistance at the 50 EMA at 1.3645.

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