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

Canadian Dollar Gains Ground Against U.S. Dollar

USD/CAD is currently trying to settle below the support level at 1.2650 while U.S. dollar is losing ground against a broad basket of currencies.

Interestingly, the U.S. Dollar Index gained strong downside momentum in the last trading session of this year. It has recently managed to get below the support at 95.75 and is moving towards the 50 EMA at 95.55. A successful test of this level will push the U.S. Dollar Index towards the support at 95.40 which will be bearish for USD/CAD.

There are no important economic reports scheduled to be released in the U.S. and Canada today so foreign exchange market traders will focus on general market sentiment.

Traders will also continue to monitor the developments in commodity markets. WTI oil managed to stay above the $76 level despite worries over the fast spread of Omicron, which is bullish for commodity-related currencies, including Canadian dollar.

Technical Analysis

USD to CAD managed to settle below the support level at 1.2680 and is trying to settle below the next support level which is located at 1.2650. RSI remains in the moderate territory despite the recent pullback, so there is plenty of room to gain additional downside momentum in case the right catalysts emerge.

In case USD to CAD manages to settle below the support at 1.2650, it will head towards the next support level at 1.2625. A move below this level will open the way to the test of the support at 1.2590. In case USD to CAD gets below 1.2590, it will move towards the support at 1.2550.

On the upside, the previous support level at 1.2680 will serve as the first resistance level for USD to CAD. In case USD to CAD manages to settle back above this level, it will head towards the next resistance level which is located at 1.2710. A successful test of this level will open the way to the test of the resistance at the 50 EMA at 1.2720.

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