USD/CAD Daily Forecast – Test Of Support At 1.3200

USD/CAD Video 17.08.20.

Falling Yields Put Pressure On The U.S. Dollar

USD/CAD is trying to settle below 1.3200 as the U.S. dollar continues to lose ground against a broad basket of currencies while WTI oil is making another attempt to settle above the nearest resistance at $42.50.

The U.S. Dollar Index has managed to get below the nearest support at 93 and is heading towards the recent lows at 92.50. In case the U.S. Dollar Index manages to settle below 92.50, it will likely gain additional downside momentum which would be bearish for USD/CAD.

In absence of economic reports, traders’ attention is focused on U.S. government bond yields. The benchmark U.S. 10-year bond yield is declining today, making the U.S. dollar less attractive.

In addition, WTI oil is showing some strength today, providing support to the Canadian dollar and putting pressure on USD/CAD.

From a big picture point of view, the U.S. dollar will likely need significant catalysts to reverse the current downside trend.

The U.S. failed to provide a new round of economic stimulus, and traders fear that the pace of U.S. recovery may slow down. In this environment, higher U.S. bond yields may provide some support to the American currency, but it remains to be seen whether 10-year bond yields will be able to get above the recent highs near 0.73%.

Technical Analysis

 

USD to CAD did not manage to gain upside momentum above 1.3235 and got back to the test of the support level at 1.3200.

In case USD to CAD settles below 1.3200, it will gain downside momentum and head towards the next support level at 1.3135.

On the upside, USD to CAD will need to get back above the nearest resistance level at 1.3235 to have a chance to develop more upside momentum.

If this happens, USD to CAD will head towards the major resistance level at the 20 EMA at 1.3330.

Currently, USD to CAD remains in a downside trend so the path of least resistance lies to the downside. As I noted above, USD to CAD will need strong catalysts to break the current trend and get above the 20 EMA.

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