USD/CAD Daily Forecast – Support Level At 1.3850 Stays Intact

USD/CAD Video 30.04.20.

USD/CAD Mixed As Rising Oil Fails To Provide Additional Boost To The Canadian Dollar

USD/CAD tested the support level at 1.3850 but received significant buyer support and rebounded despite the continued rally in the oil market. Still, USD/CAD is under pressure, and another test of the support at 1.3850 may happen soon.

The U.S. has released the new Initial Jobless Claims data which showed that 3.84 million Americans filed for unemployment benefits last week, bringing the total number of initial claims since the beginning of the crisis to more than 30 million.

Initially, the U.S. dollar held well against a broad basket of currencies, but then started to lose ground. Currently, the U.S. Dollar Index is located at 99 level, not far from monthly lows.

Canada released GDP numbers for February which showed that GDP growth was flat compared to analyst expectations which called for growth of 0.2%. Thus, the Canadian economy was already slowing down before the coronavirus pandemic delivered its heavy blow.

At this point, the rally in the oil market continues to provide support for the Canadian dollar. Meanwhile, it remains to be seen whether the U.S. dollar will be able to hold its ground against a broad basket of currencies during the never-ending wave of bad economic data and Fed’s promises to use all tools to help the economy.

Technical Analysis

USD/CAD failed to break through the support level at 1.3850 and is currently trying to settle above 1.3900. This is the second test of the support at 1.3850, and so far this level proved to be a material obstacle on the way down.

In case USD/CAD manages to settle below 1.3850, it will likely gain additional downside momentum and get to the next support level at 1.3750. For this scenario to be realized, the pair will likely need additional broad weakness of the U.S. dollar or more upside on the oil price front.

The nearest resistance for USD/CAD is located at the 50 EMA at 1.3940. In case this level is breached to the uspide, the pair will head towards the next resistance level at the 20 EMA at 1.4030. I’d note that USD/CAD may also experience some resistance near 1.4000 before it can test the 20 EMA level.