USD/CAD Daily Forecast – U.S. Dollar Is Under Pressure

USD/CAD Video 19.01.21.

Canadian Dollar Moves Higher Against U.S. Dollar

USD/CAD found itself under pressure and moved below the 20 EMA at 1.2745 while the U.S. dollar lost some ground against a broad basket of currencies.

The U.S. Dollar Index has recently made an attempt to settle below 90.50 but received support near 90.40 and rebounded back above 90.50. If the U.S. Dollar Index manages to get to the test of the next support level which is located at the 20 EMA at 90.30, USD/CAD will find itself under pressure.

Today, Canada reported that Manufacturing Sales declined by 0.6% month-over-month in November compared to analyst consensus which called for a decline of just 0.1%. Meanwhile, Wholesale Sales increased by 0.7% compared to analyst forecast which called for growth of 1%.

Tomorrow, foreign exchange market traders will focus on Bank of Canada’s Interest Rate Decision and the subsequent commentary. It remains to be seen whether Bank of Canada will hint that it is ready to provide additional stimulus.

Meanwhile, the U.S. Treasury Secretary nominee Janet Yellen has just told U.S. lawmakers to “act big” on the new coronavirus aid package. The new round of U.S. stimulus may ultimately put additional pressure on the American currency, but dollar bears have failed to push dollar to new lows at the beginning of this year.

Technical Analysis

USD to CAD declined below the 20 EMA at 1.2745 and is testing the next support level at 1.2720. If this test is successful, USD to CAD will move towards the next resistance at 1.2700. In case USD to CAD manages to settle below the support at 1.2700, it will head towards the next support level at 1.2665.

On the upside, USD to CAD needs to get back above the 20 EMA to have a chance to develop upside momentum. The next resistance level is located at 1.2775. If USD to CAD settles above this level, it will move towards the resistance at 1.2800.

From a big picture point of view, USD to CAD is stuck in the range between the support at 1.2700 and the resistance at 1.2800. Most likely, it will need additional catalysts to get out of this range.

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