USD/CAD Daily Forecast – U.S. Dollar Slips To New Lows

USD/CAD Video 03.12.20.

Canadian Dollar Developed Strong Upside Momentum Against U.S. Dollar

USD/CAD managed to get below the support at 1.2900 as the U.S. dollar continues to lose ground against a broad basket of currencies.

The U.S. Dollar Index declined below the support at the 91 level and is currently testing the next support level at 90.60. The American currency remains under severe pressure on the foreign exchange market, and the current downside momentum of the U.S. dollar is strong.

If the U.S. dollar declines below the support at 90.60, it will head towards the 90 level which will be bearish for USD/CAD.

Today, U.S. reported that Initial Jobless Claims declined from 787,000 (revised from 778,000) to 712,000. Analysts expected Initial Jobless Claims of 775,000. Meanwhile, Continuing Jobless Claims declined to 5.5 million.

Both reports were significantly better than expected but they failed to provide any support to the U.S. dollar. Tomorrow, the U.S. will release Non Farm Payrolls and Unemployment Rate reports which often have a material impact on markets. However, it remains to be seen whether they will be able to boost the U.S. dollar even if they exceed analyst expectations.

In addition to employment reports, U.S. released the final reading of Services PMI report for November. Services PMI increased from 56.9 to 58.4 compared to analyst consensus of 57.7.

Technical Analysis

USD to CAD gained strong downside momentum and is currently trying to get to the test of the nearest support level at 1.2860. In case USD to CAD manages to settle below this level, it will head towards the next support level at 1.2820.

A successful test of this support level will push USD to CAD towards the next support at 1.2800. I’d reiterate that USD to CAD has not visited this area since 2018 so it remains to be seen whether previous levels will have a major impact on today’s trading.

On the upside, the previous support at 1.2900 will likely serve as the first resistance level for USD to CAD. In case USD to CAD gets above this level, it will gain upside momentum and head towards the next resistance at 1.2930. A move above this level will open the way to the test of the resistance at 1.2985.

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