USD/CAD Daily Forecast – U.S. Dollar Continues To Decline

USD/CAD Video 23.07.20.

U.S. Dollar Remains Under Pressure

USD/CAD continues its downside move and is trying to settle below 1.3400 as oil stays above the key support level at $41.50 while the U.S. dollar is losing ground against a broad basket of currencies.

The U.S. Dollar Index made an attempt to rebound and spent some time above the 95 level but lost upside momentum and headed towards the test of March lows. The continued weakness of the U.S. dollar is bearish for USD/CAD.

In case the U.S. Dollar Index settles below 94.65, it may gain additional downside momentum, putting more pressure on USD/CAD.

Today, the U.S. has provided Initial Jobless Claims and Continuing Jobless Claims reports. Initial Jobless Claims increased to 1.4 million which was a negative suprise for the market.

Meanwhile, Continuing Jobless Claims were 16.2 million which was much better than the analyst consensus of 17.1 million.

It looks like the U.S. dollar weakness is due to lack of bullish ideas. Safe haven buying has shifted to precious metals while the stock market is also in the upside mode. In this environment, demand for riskier assets remains high while the desire to hedge against potential market downside is satisfied by precious metals, and the U.S. dollar becomes an obvious choice for short bets.

At this point, it is clear that the American currency will need significant catalysts to break the current downside momentum.

Technical Analysis

USD to CAD has settled below 1.3400 and is ready to test the nearest support level at 1.3360. RSI is still at reasonable levels so there is room to develop more downside momentum.

In case USD to CAD declines below 1.3360, it will head towards the next support level at the low of the previous downside move at 1.3315.

The current downside momentum is strong so USD to CAD will need significant upside catalysts to get more support.

The nearest resistance level is located at the previous support at 1.3440. If USD to CAD gets above this level, it will head towards the major resistance level at 1.3500.

The 20 EMA continues to decline and is currently located at 1.3535. Soon, it may get to 1.3500, making this resistance level stronger.

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