USD/CAD Daily Forecast – Test Of Support At 1.3500USD/CAD is under pressure amid global market optimism and rising oil prices.
USD/CAD Video 23.06.20.
The U.S. has recently reported Flash PMI numbers for June. Services PMI increased from 37.5 to 46.7 while Manufacturing PMI increased from 39.8 to 49.6. Both reports were better than analyst expectations.
In Europe, PMI reports were significantly better than expected and provided material support to global markets, increasing demand for riskier currencies like the Canadian dollar.
Meanwhile, WTI oil has managed to get above $40, providing additional support to the Canadian dollar. The current setup is rather bearish for USD/CAD as the U.S. dollar continues to decline against a broad basket of currencies while oil is moving to new highs.
USD/CAD is currently testing the support level at 1.3500. At the same time, USD/CAD is still in the range between the support at 1.3500 and the recent resistance at 1.3610, and it will have to get out of this range to gain more momentum.
The 20 EMA has declined towards 1.3590 so it remains to be seen whether USD/CAD will face resistance at 1.3610 or the new position of the 20 EMA will serve as a major level.
In any case, a move above the area between the 20 EMA at 1.3590 and the previous resistance at 1.3610 will lead to increased upside momentum. In this scenario, USD/CAD will head towards the next major resistance level at 1.3730.
On the support side, a move below 1.3500 will signal a return to the downside trend after a period of consolidation. In this case, USD/CAD may quickly head towards the next support level at 1.3440.
A move below 1.3440 will open the way to the recent lows at 1.3360. I’d note that while USD/CAD has made a temporary move below 1.3360, this move was experienced right after the U.S. Federal Reserve Interest Rate Decision and the subsequent comments. Such moves are often chaotic and do not show the true support and resistance levels.
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