USD/CAD Daily Forecast – U.S. Dollar Fails To Gain More Upside Momentum

USD/CAD Video 20.08.20.

Canadian Dollar Stays Strong

USD/CAD did not manage to gain significant upside momentum and continues to trade near 1.3200 as the U.S. Dollar Index failed to settle above the 93 level.

Yesterday, the release of FOMC Minutes provided significant support to the American currency as the Fed was not as dovish as many traders expected. However, it remains to be seen whether the U.S. dollar will be able to gain more upside momentum, especially after the release of disappointing U.S. employment data.

U.S. Initial Jobless Claims report showed that 1.1 million Americans filed for unemployment benefits in a week. Analysts expected Initial Jobless Claims of 925,000.

Continuing Jobless Claims declined from 15.5 million to 14.8 million and helped mitigate the negative impact of the disappointing Initial Jobless Claims report. That said, the situation in the U.S. job market remains challenging which may put pressure on the U.S. dollar.

Meanwhile, Canada’s ADP Employment Change report indicated that 1.15 million jobs were added in July, providing some additional support to the Canadian dollar.

Technical Analysis

USD to CAD made an attempt to settle above 1.3200 but faced significant resistance at 1.3235. This level has already been tested several times during recent trading sessions and proved that it is a major obstacle on the way up for USD to CAD.

In case USD to CAD manages to settle above this level, it will head towards the next resistance at the 20 EMA at 1.3295.

A move above the 20 EMA will be a major development for USD to CAD bulls since it will signal that USD to CAD has good chances to establish a new upside trend.

In this scenario, USD to CAD will head towards the next resistance level at 1.3330.

On the support side, the nearest support for USD to CAD is located at the recent lows at 1.3135. A move below this level will allow USD to CAD to continue the current downside trend.

If this happens, USD to CAD will head towards the next major support level at 1.3080.

For now, the downside trend remains intact, and USD to CAD will certainly need more upside catalysts to have a chance for more upside.

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