USD/CAD Daily Forecast – U.S. Dollar Tries To Rebound After Sell-OffUSD/CAD is trying to settle above 1.3800 as demand for safe haven assets provides support to the U.S. dollar.
USD/CAD Video 27.05.20.
U.S. Dollar Index has recently tried to settle below the key 99 level but faced significant support and rebounded back above 99. A move below 99 would have been bearish for USD/CAD as it would have signaled broad U.S. dollar weakness.
In addition to the rebound of the U.S. dollar, oil is under pressure, which is a bearish catalyst for the Canadian currency.
Canada has recently reported that Building Permits declined by 17.1% month-over month in April which is not surprising given the significant pressure from coronavirus-related measures.
Interestingly, the Bank of Canada stated that it could provide additional monetary stimulus if necessary. The Bank of Canada maintains its 2% inflation target, although the near-term challenge is to avoid deflation.
USD/CAD has recently breached the important support level at 1.3850 and gained downside momentum. Today, USD/CAD is trying to rebound after this material downside move.
The nearest resistance for USD/CAD is located at the previous support level at 1.3850. I’d expect very material interest from traders in case USD/CAD gets back to this level.
Previously, USD/CAD was in a wide trading range between 1.3850 and 1.4250, and a move out of this range is a major development.
In case USD/CAD manages to get above 1.3850, it will likely gain additional upside momentum and head towards the next resistance level at the 50 EMA at 1.3970.
On the downside, the nearest support level is located at the recent lows at 1.3730. The 20 EMA is about to cross the 50 EMA to the downside, suggesting the continuation of the current momentum. Thus, a test of the nearest support level is likely unless the U.S. dollar gets too much support from the demand for safe haven assets.
In case USD/CAD manages to settle below 1.3730, it will gain additional downside momentum and head towards the next support level at 1.3650.
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