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USD/CAD Daily Forecast – U.S. Dollar Is Losing Ground

By:
Vladimir Zernov
Published: Feb 9, 2021, 17:54 UTC

USD/CAD settled below the support at 1.2720 and is trying to settle below the next support level at 1.2700.

USD/CAD

In this article:

USD/CAD Video 09.02.21.

Canadian Dollar Moves Higher Against U.S. Dollar

USD/CAD is moving towards the support at 1.2700 while the U.S. dollar is losing ground against a broad basket of currencies.

The U.S. Dollar Index is currently trying to settle below the nearest support level at 90.50. If this attempt is successful, the U.S. Dollar Index will head towards the next support at 90.30 which will be bearish for USD/CAD.

No important economic reports are scheduled to be released today in the U.S. and Canada so foreign exchange market traders will focus on general market sentiment. Today, this sentiment is favorable for riskier assets, including commodity-related currencies like Canadian dollar.

Tomorrow, traders will focus on U.S. inflation reports which will show whether inflation has started to increase at the beginning of 2021. Analysts expect that Core Inflation Rate increased by 1.5% year-over-year in January. Inflation Rate is also projected to grow by 1.5%.

If inflation is stronger than analysts expect, U.S. government bond yields may increase and provide some support to the U.S. dollar, but it remains to be seen whether prices can grow without a new round of U.S. economic stimulus.

Technical Analysis

usd cad february 9 2021

USD to CAD managed to get below the support at 1.2720 and is trying to settle below the next support level at 1.2700. If this attempt is successful, USD to CAD will gain downside momentum and head towards the next support level at 1.2665. RSI is in the moderate territory so there is plenty of room to gain downside momentum in case the right catalysts emerge.

If USD to CAD declines below the support at 1.2700, it will head towards the next support level at 1.2665. A successful test of this level will open the way to the test of the support at 1.2625. In case USD to CAD gets below the support at 1.2625, it will head towards the support at 1.2590.

On the upside, USD to CAD needs to get back above 1.2720 to have a chance to develop upside momentum in the near term. The next resistance level is located at 1.2750. If USD to CAD settles above this level, it will get to the test of the resistance at the 20 EMA at 1.2760. A move above the 20 EMA will open the way to the test of the resistance at 1.2775.

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

About the Author

Vladimir is an independent trader and analyst with over 10 years of experience in the financial markets. He is a specialist in stocks, futures, Forex, indices, and commodities areas using long-term positional trading and swing trading.

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