USD/CAD Daily Forecast – U.S. Dollar Fails To Continue Its Rebound

USD/CAD Video 04.09.20.

Canadian Dollar Rebounds After Yesterday’s Sell-Off

USD/CAD is pulling back after yesterday’s upside move despite weak oil and broad U.S. dollar strength.

The U.S. Dollar Index, which measures the strength of the U.S. dollar against a broad basket of currencies, continues its rebound and is trying to settle above the 93 level.

U.S. Unemployment Rate declined from 10.2% in July to 8.4% in August and served as a bullish catalyst for the American currency. The U.S. Non Farm Payrolls report was also encouraging as it showed that the American economy added 1.37 million jobs in August.

Meanwhile, Canada provided Employment Change and Unemployment Rate data for August. The Employment Change report indicated that the Canadian economy added 248,800 jobs compared to analyst consensus of 275,000.

Unemployment Rate declined from 10.9% to 10.2% while analysts expected Unemployment Rate of 10.1%.

WTI oil is currently testing the $40 level which is a bearish development for commodity-related currencies like the Canadian dollar. However, USD/CAD did not show much sensitivity to oil in recent trading sessions and continues to ignore the developments on the oil price front.

Technical Analysis

USD to CAD failed to settle above the nearest resistance level at 1.3135 and declined closer to 1.3100. Yesterday, I wrote that USD to CAD may get some support at 1.3080, and today’s trading session confirmed that USD to CAD attracts some buyer interest at this level.

If USD to CAD settles below 1.3080, it will head towards the next support level at 1.3050. A move below 1.3050 will likely lead to increased downside momentum and push USD to CAD towards the recent lows at 1.3000.

On the upside, USD to CAD needs to get above the nearest resistance at 1.3135 to have a chance to continue its rebound. If this happens, USD to CAD will have to deal with the next resistance at the 20 EMA at 1.3160.

A move above the 20 EMA will signal that USD to CAD is ready to gain more upside momentum. In this scenario, USD to CAD will head towards the next material resistance level at 1.3235.

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