USD/CAD Daily Forecast – U.S. Dollar Rallies After Strong Jobs Report
USD/CAD Video 03.06.21.
Canadian Dollar Is Under Strong Pressure
USD/CAD is currently trying to settle above the 20 EMA at 1.2110 while the U.S. dollar is gaining ground against a broad basket of currencies.
The U.S. Dollar Index has managed to settle above the resistance at 90.30 and is testing the resistance level at 90.50. In case this test is successful, the U.S. Dollar Index will head towards the next resistance which is located at the 50 EMA at 90.70.
Today, the U.S. released ADP Employment Change report which indicated that private businesses hired 978,000 workers in May compared to analyst consensus of 650,000.
This report had a major impact on currency dynamics on the foreign exchange market as it showed that the job market recovered faster than expected. The Fed has previously emphasized the need to provide support to the job market, and strong employment reports are interpreted as a sign that Fed may start reducing the pace of its asset purchases sooner than expected.
This scenario is bullish for the U.S. dollar, so it’s not surprising to see that the American currency gained strong upside momentum in today’s trading session.
Other economic reports from the U.S. also exceeded expectations. Initial Jobless Claims declined from 405,000 (revised from 406,000) to 385,000 compared to analyst consensus of 390,000. The final reading of Services PMI report for May indicated that Services PMI increased from 64.7 in April to 70.4 in May compared to analyst consensus of 70.1.
USD to CAD is currently testing the resistance at the 20 EMA at 1.2110. If this test is successful, USD to CAD will move towards the next resistance at 1.2130.
In case USD to CAD gets above 1.2130, it will head towards the next resistance level at 1.2170. A successful test of this level will open the way to the test of the resistance at 1.2200.
On the support side, a move below the 20 EMA will lead to a test of the support at 1.2100. In case USD to CAD declines below this level, it will head towards the next support at 1.2080. A move below 1.2080 will push USD to CAD towards the support at 1.2065.
For a look at all of today’s economic events, check out our economic calendar.