USD/CAD Daily Forecast – U.S. Dollar Rallies Against Canadian Dollar

Canadian Dollar Is Under Strong Pressure

USD/CAD is trying to settle above the resistance at 1.2760 while U.S. dollar is gaining ground against a broad basket of currencies.

The U.S. Dollar Index managed to settle above the 96 level and is trying to settle above the next resistance at 96.25. In case this attempt is successful, the U.S. Dollar Index will move towards the resistance at 96.50 which will be bullish for USD/CAD.

Today, foreign exchange market traders had a chance to take a look at the final reading of U.S. Manufacturing PMI report for December. The report indicated that Manufacturing PMI declined from 58.3 in November to 57.7 in December compared to analyst consensus of 57.8.

Traders also focused on the developments in U.S. government bond markets. Treasury yields rallied today, providing support to the U.S. dollar. Importantly, the rally was broad-based. The yield of 2-year Treasuries and the yield of 30-year Treasuries moved higher at a robust pace. In case Treasury yields continue to move higher, U.S. dollar may get more support.

Technical Analysis

USD to CAD is currently testing the resistance level at 1.2760. In case this test is successful, USD to CAD will get to another test of the resistance level which is located at the 20 EMA at 1.2770. If USD to CAD gets above the 20 EMA, it will get to the test of the next resistance level at 1.2780.

A move above the resistance at 1.2780 will push USD to CAD towards the resistance at 1.2800. If USD to CAD manages to settle above this level, it will continue its upside move and head towards the resistance at 1.2825.

On the support side, a move below 1.2760 will push USD to CAD back towards the support level at 1.2730. If USD to CAD declines below this level, it will head towards the 50 EMA which is located at 1.2720. A move below the 50 EMA will open the way to the test of the next support level at 1.2710.

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