USD/CAD Daily Forecast – U.S. Dollar Rebounds After Recent Sell-Off

USD/CAD Video 24.04.20.

Canadian Dollar Fails To Continue Its Upside Move

USD/CAD returned above the 20 EMA at 1.4070 as the original optimism of the equity markets faded and oil lost momentum after the recent rebound.

In Canada, no material economic data was released today, but the U.S. reported important information on Durable Goods Orders and Michigan Consumer Sentiment.

Durable Goods Orders came at -14.4% compared to analyst expectations of -11.9%, while Michigan Consumer Sentiment was 71.8 compared to analyst expectations of 68.

From a big picture point of view, the economic data continues to show a huge hit to the U.S. economy which is dealt by coronavirus containment measures.

Previously, bad data often led to the upside of the U.S. dollar, which continues to serve as safe haven asset of last resort. However, this time was different, and the U.S. dollar is roughly flat against a broad basket of currencies.

Oil, which is an important catalyst for USD/CAD since it has a major impact on the Canadian economy, is also showing muted action after huge swings that happened during this week.

In these circumstances, USD/CAD continues to follow the path of least resistance which is to the upside since the recent one-day sell-off was not sufficient enough to change the local trend.

The next Monday will be mostly empty from an economic data point of view so the trading action in USD/CAD will depend on technical factors and oil price dynamics.

Technical Analysis

USD/CAD continues to move up in the local upside channel. The nearest resistance level for the pair is located at 1.4250, near recent highs. This is a major level for the pair, and it is highly likely that USD/CAD will need signficant catalysts to settle above 1.4250.

In this case, USD/CAD will head towards the next resistance level at 1.4330. The successful test of this level will open the way towards 1.4500.

On the support side, the nearest support level, which has recently been tested, is located at 1.4000. If this level is breached to the downside, USD/CAD will head towards the 50 EMA level at 1.3935. If USD/CAD manages to settle below 1.3935, the next support is located at the lows of the previous downside move at 1.3850.