USD/CAD Daily Forecast – U.S. Dollar Pulls Back After Rally

U.S. Dollar Is Under Pressure Against Canadian Dollar

USD/CAD is currently trying to settle below the support level at 1.2780 while U.S. dollar is losing ground against a broad basket of currencies.

The U.S. Dollar Index has recently made an attempt to settle below the support level at 96 but lost momentum and rebounded towards 96.15. The nearest resistance level for the U.S. Dollar Index is located at 96.25. In case the U.S. Dollar Index settles back above this level, it will head towards the next resistance at 96.50 which will be bullish for USD/CAD.

Today, foreign exchange market traders focused on the economic data from U.S. Initial Jobless Claims report indicated that 206,000 Americans filed for unemployment benefits in a week compared to analyst consensus of 200,000. Continuing Jobless Claims declined from 2 million to 1.85 million compared to analyst consensus of 1.94 million.

U.S. Manufacturing PMI declined from 58.3 in November to 57.8 in December while analysts expected that it would increase to 58.5. U.S. Services PMI decreased from 58 to 57.5 compared to analyst consensus of 58.5. While PMI reports missed analysts estimates, they indicated that U.S. economy was in a good shape as PMI numbers above 50 show expansion.

Technical Analysis

USD to CAD managed to settle below the support at 1.2800 and is trying to settle below the next support level at 1.2780. RSI remains in the moderate territory, and there is plenty of room to gain additional downside momentum in case the right catalysts emerge.

If USD to CAD declines below 1.2780, it will head towards the support at 1.2760. A move below this level will push USD to CAD towards the support level which is located at the 20 EMA at 1.2740. In case USD to CAD manages to settle below the 20 EMA, it will head towards the support at 1.2710, although it may also get some support near 1.2730.

On the upside, the previous support at 1.2800 will serve as the first resistance level for USD to CAD. In case USD to CAD climbs back above this level, it will head towards the resistance level at 1.2825. A move above this level will open the way to the test of the resistance at 1.2850.

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