USD/CAD Daily Forecast – U.S. Dollar Rebounds Ahead Of The Weekend

USD/CAD Video 18.12.20.

Canadian Dollar Is Under Pressure

USD/CAD is trying to settle above the resistance at 1.2775 while the U.S. dollar is gaining ground against a broad basket of currencies.

The U.S. Dollar Index has recently managed to get above the resistance at the 90 level and is trying to develop upside momentum. The next resistance for the U.S. Dollar Index is located at 90.15. If the U.S. Dollar Index settles above this level, it will head towards the resistance at 90.50 which will be bullish for USD/CAD.

Today, foreign exchange market traders focus on U.S. stimulus negotiations. Recent reports suggest that U.S. lawmakers will not be able to reach a compromise deal today and will have to pass a stopgap spending bill to avoid the shutdown of the government.

The absence of stimulus may push some traders to reduce their short positions in the dollar although it remains to be seen whether the American currency will be able to gain enough momentum for a serious rebound.

Interestingly, strong oil failed to provide any support to the Canadian dollar today. However, the Canadian currency will likely get some additional support in case WTI oil gets to the test of the psychologically important $50 level.

Technical Analysis

USD to CAD is currently trying to settle above the resistance at 1.2775. This resistance level has already been tested many times and proved its strength. In case USD to CAD settles above this level, it will head towards the next resistance level at 1.2800.

A successful test of the resistance at 1.2800 will push USD to CAD towards the next resistance at the 20 EMA at 1.2835. A move above the 20 EMA will open the way to the test of the resistance at 1.2860.

On the support side, the nearest support level for USD to CAD is located at 1.2750. In case USD to CAD declines below this level, it will head towards the support at 1.2720.  A move below the support at 1.2720 will push USD to CAD towards the support at 1.2700. Most likely, USD to CAD will need additional catalysts to settle below 1.2700.

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