USD/CAD Daily Forecast – Test Of Support At 1.2840

USD/CAD Video 23.12.20.

U.S. Dollar Pulls Back Against Canadian Dollar

USD/CAD is currently testing the support at the 20 EMA at 1.2840 while the U.S. dollar is losing ground against a broad basket of currencies.

The U.S. Dollar Index gained downside momentum on the foreign exchange market after reports about an imminent success of the Brexit trade deal. The U.S. Dollar Index managed to settle below 90.50 and made an attempt to get to the test of the support at 90 but did not manage to decline below 90.15. If the U.S. Dollar Index tests the support at the 90 level, USD/CAD will find itself under more pressure.

Today, U.S. reported that Initial Jobless Claims declined to 803,000 while Continuing Jobless Claims declined to 5.34 million. Both reports were better than analyst expectations.

Other reports were not so encouraging. Personal Income declined by 1.1% month-over-month in November compared to analyst consensus which called for a decline of 0.3%. Personal Spending decreased by 0.4%.

These reports highlighted the need for another round of stimulus which is under question after U.S. President Donald Trump threatened not to sign the bill unless stimulus checks were increased from $600 to $2,000 per person.

New Home Sales declined by as much as 11% month-over-month in November while analysts expected that they would decline by just 0.3%. It looks like the initial boost from the pandemic and low interest rates is over, and the housing market will gave to find additional drivers of growth.

Technical Analysis

USD to CAD managed to get below the support at 1.2860 and is trying to settle below the next support level at the 20 EMA at 1.2840.

If this attempt is successful, USD to CAD will gain additional downside momentum and head towards the next support level at 1.2800. A move below this level will push USD to CAD towards the support at 1.2775.

On the upside, USD to CAD needs to get back above 1.2860 to have a chance to gain upside momentum. The next resistance level is located at 1.2900. If USD to CAD settles above 1.2900, it will head towards the next resistance at the 50 EMA at 1.2950.

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