USD/CAD Daily Forecast – U.S. Dollar Declines After Weak GDP Growth Rate Report

U.S. Dollar Is Losing Some Ground Against Canadian Dollar

USD/CAD continues its attempts to settle below the support level at 1.2340 while the U.S. dollar is losing ground against a broad basket of currencies.

The U.S. Dollar Index gained strong downside momentum and managed to get below the 50 EMA which is located near 93.45. The next support level for the U.S. Dollar Index is located at 93.10. In case the U.S. Dollar Index gets to the test of this support level, USD/CAD will find itself under more pressure.

Today, U.S. reported that GDP increased by 2% quarter-over-quarter in Q3 2021 while analysts expected that it would grow by 2.7%. This report put pressure on the American currency as weaker GDP growth may force Fed to be more dovish on its upcoming meeting on November 2-3, 2021.

Foreign exchange market traders also took a look at Initial Jobless Claims report which showed that 281,000 Americans filed for unemployment benefits in a week compared to analyst consensus of 290,000. Continuing Jobless Claims decreased from 2.48 million to 2.24 million while analysts expected that they would decline to 2.42 million. Pending Home Sales declined by 2.3% month-over-month in September while analysts believed that they would remain unchanged compared to August levels.

It should be noted that U.S. dollar’s losses against Canadian dollar were limited as WTI oil moved below the $82 level, which was bearish for commodity-related currencies.

Technical Analysis

USD to CAD failed to settle above the resistance at 1.2380 and moved back towards the support level at 1.2340. If USD to CAD declines below this level, it will move towards the support at 1.2320.

A successful test of the support at 1.2320 will open the way to the test of the next support at 1.2300. In case USD to CAD manages to settle below 1.2300, it will head towards the support at 1.2270.

On the upside, USD to CAD must get above 1.2380 to have a chance to rebound in the near term. The next resistance level for USD to CAD is located at 1.2400. If USD to CAD gets above this level, it will move towards the 20 EMA at 1.2425.

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