USD/CAD Daily Forecast – U.S. Dollar Loses Ground On Vaccine Hopes
USD/CAD Video 20.07.20.
Canadian Dollar Enjoys A Boost After AstraZeneca Reports Encouraging Early-Stage Results For Its COVID-19 Vaccine
USD/CAD moved closer to the low end of the current trading range between the support at 1.3500 and the resistance at the 20 EMA at 1.3580 as the U.S. dollar remained under pressure against a broad basket of currencies while WTI oil continued to trade above the $40 level.
The U.S. Dollar Index has settled below the 96 level and continues its downside move. Today, AstraZeneca reported positive early-stage trial results of its COVID-19 vaccine, providing support to riskier assets.
Interestingly, the vaccine news did not prevent gold from testing yearly highs which signals that safe haven buying has shifted from the American currency to gold.
In the longer run, this shift may present a problem for the U.S. dollar which has settled near lows that were reached back in June. In case the U.S. Dollar Index manages to get below 95.50, the U.S. dollar will gain more downside momentum.
This scenario will be bearish for USD/CAD which will likely find itself below the nearest support level at 1.3500.
Meanwhile, WTI oil fails to gain more upside momentum above the $40 level so Canadian dollar does not get additional support. In case oil moves above the nearest resistance at $41.50, commodity-related currencies like the Canadian dollar will get a boost.
USD to CAD remains range-bound but trends closer to the low end of the current trading range at 1.3500. This support level has already been tested many times and proved its strength but continued U.S. dollar weakness against a broad basket of currencies increases risks of a downside breakout.
If this happens, USD to CAD will gain downside momentum and head towards the next support at 1.3440. If the downside momentum is strong, USD to CAD may quickly get below 1.3440 and move towards the next support at 1.3360.
On the upside, the 20 EMA at 1.3580 remains the first resistance level for USD to CAD. The next resistance level is located at the 50 EMA, which has declined to 1.3640 and is set to decline further as USD to CAD stays below 1.3600.
For a look at all of today’s economic events, check out our economic calendar.