USD/CAD Daily Forecast – Test Of Resistance At 1.3570

USD/CAD Video 11.06.20.

U.S. Dollar Gains Ground Amid Demand For Safe Haven Assets

USD/CAD returned back above 1.3500 as the U.S. dollar was boosted by global market sell-off  while the Canadian dollar was put under pressure by falling oil prices.

The U.S. Fed has put pressure on the markets as it predicted that the U.S. economy will shrink by 6.5% in 2020 while the Unemployment Rate will be at 9.3% at the end of the year.

This forecast caused a major exit out of riskier assets and put significant pressure on commodity-related currencies like the Canadian dollar.

In turn, the U.S. dollar was boosted by its safe haven status, and the U.S. Dollar Index returned back above the 96 level. However, I’d note that the upside move of the U.S. Dollar Index was not very significant, so the upside in USD/CAD is primarily due to the weakness of the Canadian dollar.

The near-term dynamics of USD/CAD will depend on whether the current global market sell-off turns into a correction. If the pullback lasts more than one day, USD/CAD may break the recent downside trend and get back to the upside mode.

Technical Analysis

USD/CAD managed to get above the resistance at 1.3500 and tests the next resistance at 1.3570. In case this test is successful, USD/CAD may get more upside momentum and head towards the 20 EMA at 1.3630.

In addition, a move above 1.3570 will mark the end of the current downside trend, and USD/CAD will have a chance to establish a new upside trend. If USD/CAD will settle above the 20 EMA at 1.3630, it will head towards the major resistance level at 1.3730.

On the support side, the nearest support for USD/CAD is at 1.3500. If USD/CAD fails to stay above 1.3500 and dives below this level, it will transfer back to the trading range between 1.3360 and 1.3500.

I’d note that USD/CAD has briefly fallen below 1.3360 right after the announcement of the U.S. Federal Reserve Interest Rate Decision, but this was a news-driven move and I expect that the support at 1.3360 will stay in place in case USD/CAD declines towards this level.

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