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

USD/CAD Video 30.12.20.

Canadian Dollar Gains Ground Against U.S. Dollar

USD/CAD gained downside momentum and is testing the support level at 1.2750 while the U.S. dollar continues to lose ground against a broad basket of currencies.

The U.S. Dollar Index declined below the support at 89.75 and made an attempt to develop additional downside momentum. The next support level for the U.S. Dollar Index is located at 89.40. If the U.S. Dollar Index moves towards this level, USD/CAD will get more support.

Interestingly, the uncertainty on the U.S. stimulus front had no impact on the foreign exchange market as traders continued to sell the American currency. Perhaps, many traders believe that $600 stimulus checks will be sufficient enough to support the economy or expect additional stimulus in early 2021.

Today, the U.S. reported that Pending Home Sales decreased by 2.6% month-over-month in November after declining by 0.9% (revised from -1.1%) in October. Analysts expected that Pending Home Sales would remain unchanged. It looks like the housing market has started to cool down after the major boost provided by low interest rates and unprecedented stimulus.

Technical Analysis

USD to CAD managed to get below the support at 1.2775 and is trying to settle below the next support level which is located at 1.2750. RSI remains in the moderate territory so there is plenty of room to gain additional downside momentum in case the U.S. Dollar Index remains under serious pressure.

In case USD to CAD declines below 1.2750, it will move towards the next support level at 1.2720. A successful test of the support at 1.2720 will push USD to CAD towards the next support which is located near yearly lows at 1.2700.

On the upside, the previous support level at 1.2775 may serve as the first resistance level for USD to CAD. A move above this level will open the way to the test of the next resistance at 1.2800. If USD to CAD gets above the resistance at 1.2800, it will head towards the resistance which is located at the 20 EMA at 1.2830.

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