USD/CAD Daily Forecast – Test Of Support At 1.2080

USD/CAD Video 11.05.21.

U.S. Dollar Remains Under Pressure Against Canadian Dollar

USD/CAD is trying to settle below the support which has emerged at 1.2080 while the U.S. dollar is losing ground against a broad basket of currencies.

The U.S. Dollar Index is currently testing the support at the 90 level. In case the U.S. Dollar Index manages to settle below this level, it will head towards the support at 89.75 which will put more pressure on USD/CAD.

At this point, markets are focused on the threat of rising inflation. Tomorrow,  traders will have a chance to take a look at inflation data from the U.S.

Analysts expect that Inflation Rate will increase by 3.6% year-over-year while Core Inflation Rate will grow by 2.3%. The reports may have a significant impact on foreign exchange market dynamics, and traders should also keep an eye on the developments in U.S. government bond markets.

Currently, Treasury yields are moving higher, and the yield of 10-year Treasuries is trying to settle above the resistance at the 20 EMA at 1.60%. However, stronger yields do not provide support to the U.S. dollar which remains under pressure against a broad basket of currencies, and it remains to be seen whether higher yields will be able to provide more support to the American currency.

Technical Analysis

USD to CAD declined below 1.2100 and is testing the next support level which has emerged at 1.2080. In case USD to CAD settles below 1.2080, it will head towards the next support level at 1.2065.

A move below the support at 1.2065 will push USD to CAD towards the next support at 1.2040. If USD to CAD gets below 1.2040, it will head towards the support at 1.2000.

On the upside, a move above 1.2100 will push USD to CAD towards the resistance at 1.2130. This resistance level has already been tested several times in recent trading sessions and proved its strength.

In case USD to CAD settles above 1.2130, it will move towards the resistance at 1.2170. A move above this level will push USD to CAD towards the resistance at 1.2200.

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