USD/CAD Daily Forecast – U.S. Dollar Rebounds After Yesterday’s Sell-Off

USD/CAD Video 16.02.21.

Canadian Dollar Is Under Pressure

USD/CAD is currently trying to settle above the resistance at 1.2700 while the U.S. dollar is gaining ground against a broad basket of currencies.

The U.S. Dollar Index failed to settle below the support at 90.30 and rebounded above the resistance at 90.50. Currently, the U.S. Dollar Index is testing the next resistance level which is located at the 20 EMA at 90.60. A move above this level will push the U.S. Dollar Index towards the resistance at the 50 EMA at 90.75 which will be bullish for USD/CAD.

Today, the U.S. reported that NY Empire State Manufacturing Index increased from 3.5 in January to 12.1 in February. It looks like economy gained additional momentum in February as the number of new coronavirus cases declined from the previous peak.

WTI oil pulled back after rally and declined below the psychologically important $60 level, putting pressure on commodity-related currencies including Canadian dollar. If the pullback in the oil market continues, Canadian dollar will find itself under additional pressure.

Tomorrow, foreign exchange market traders will focus on U.S. Retail Sales data for January. Analysts expect that Retail Sales increased by 1.1% month-over-month. Traders will also have a chance to take a look at Canada’s inflation data for January. Inflation Rate is projected to grow by 0.9% year-over-year while Core Inflation Rate is expected to increase by 1.4%.

Technical Analysis

USD to CAD gained upside momentum and managed to get above the resistance at 1.2665. Currently, USD to CAD is trying to settle above the resistance at 1.2700.

If this attempt is successful, USD to CAD will head towards the next resistance level which is located at the 20 EMA at 1.2725. A move above the 20 EMA will push USD to CAD towards the next resistance at 1.2750. In case USD to CAD gets above this level, it will head towards the resistance at the 50 EMA at 1.2770.

On the support side, the nearest support level for USD to CAD is located at 1.2665. In case USD to CAD declines below this level, it will head towards the next support at 1.2625. The support at 1.2625 was tested during the current trading session, and USD to CAD received strong support at this level.

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