USD/CAD Daily Forecast – Test Of Support At 1.2625USD/CAD settled below the support at 1.2665 and tested the next support level at 1.2625.
USD/CAD Video 20.01.21.
Canadian Dollar Gained Strong Upside Momentum
USD/CAD is testing the support level at 1.2625 while the U.S. dollar is mostly flat against a broad basket of currencies.
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The U.S. Dollar Index is currently trading in the range between the support at the 20 EMA at 90.35 and the resistance at 90.50. If the U.S. Dollar Index settles below the 20 EMA, it will gain additional downside momentum and move towards the 90 level which will be bearish for USD/CAD.
Today, Canada reported that Inflation Rate decreased by 0.2% month-over-month in December. Analysts expected that Inflation Rate would remain unchanged. On a year-over-year basis, Inflaiton Rate grew by 0.7% compared to analyst consensus of 1%. Meanwhile, Core Inflation Rate increased by 1.5% year-over-year. Meanwhile, the Bank of Canada left the interest rate unchanged at 0.25%, in line with the analyst consensus.
Interestingly, today’s inauguration of Joe Biden had little impact on the dynamics of the U.S. dollar on the foreign exchange market. Perhaps, traders would like to see his first moves before evaluating the future trajectory of the American currency.
Today, commodity-related currencies like Canadian dollar received material support as oil gained ground on stimulus optimism. If WTI oil manages to settle above multi-month highs, Canadian dollar will get additional support.
USD to CAD managed to get below the support at 1.2665 and tested the next support level at 1.2625. USD to CAD failed to settle below the support at 1.2625 on the first attempt, but it maintains good chances to get to another test of this support level. RSI is in the moderate territory, and there is plenty of room to gain additional downside momentum.
If USD to CAD settles below 1.2625, it will head towards the next support level at 1.2590. A successful test of this level will push USD to CAD towards the next support which is located at 1.2550.
On the upside, the previous support at 1.2665 will likely serve as the first resistance level for USD to CAD. A move above this level will push USD to CAD towards the resistance at 1.2700. If USD to CAD gets above 1.2700, it will head towards the resistance at 1.2720.
For a look at all of today’s economic events, check out our economic calendar.