USD/CAD Daily Forecast – U.S. Dollar Tries To Gain Ground Ahead Of The Weekend

USD/CAD Video 19.06.20.

Canadian Retail Sales Decline By 26.4% In April

USD/CAD stays below the 20 EMA at 1.3610 as oil price strength is offset by weak Canadian Retail Sales data.

Canada’s Retail Sales declined by 26.4% month-over-month in April compared to analyst consensus which called for a decline of 15.1%. Please note that while most developed countries have already reported data for May, Canada’s report is for April which was the most challenging month during the current crisis.

On a year-over-year basis, Retail Sales declined by as much as 32.5%. Excluding Autos, Retail Sales shrank by 22% month-over-month. In May, Retail Sales are expected to grow by 19.1% but this data still has to be confirmed officially.

Meanwhile, the U.S. Dollar Index is trying to settle above the nearest resistance at 97.5. If this attempt is successful, the U.S. dollar will continue to gain ground against a broad basket of currencies which will be bullish for USD/CAD.

Oil continues to provide material support to the Canadian dollar as WTI oil has recently breached the psychologically important $40 level. If oil settles above this level, it will likely gain upside momentum and head higher, providing additional support to the Canadian currency.

Technical Analysis

USD/CAD still trades in a range between the support level at 1.3500 and the resistance level at the 20 EMA at 1.3610. USD/CAD has already tested the high end of this range several times but the resistance at 1.3610 is strong.

I’d note that each pullback from this resistance is stopped at a higher level so the buyer pressure is clearly increasing. Currently, USD/CAD has good chances to get above the 20 EMA unless there is a sudden sell-off in the U.S. Dollar Index.

In this scenario, USD/CAD will gain significant upside momentum and head towards the major resistance level at 1.3730. The 50 EMA is at 1.3740 so this level will likely be very strong.

On the support side, the nearest support level is located at 1.3500. To get below this level, USD/CAD will need additional catalysts, like a major rally in the oil market. If this happens, USD/CAD will head towards the next support at 1.3440.

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