USD/CAD Daily Forecast – U.S. Dollar Under Pressure Amid Global Market Optimism

USD/CAD Video 06.07.20.

Oil Gets Above $40 And Provides Additional Support To The Canadian Dollar

USD/CAD stays in the range between the support level at 1.3500 and the resistance level at the 20 EMA at 1.3595 but is located closer to the lower end of this range as the U.S. dollar is losing ground against a broad basket of currencies.

The U.S. Dollar Index has found itself under material pressure as traders increased their support to riskier assets on optimism about economic recovery. As a result, the U.S. Dollar Index fell below the nearest support level at 97 and declined towards 96.5.

However, the U.S. dollar got some support after the release of Services PMI and Composite PMI reports for June. Services PMI increased from 37.5 in May to 47.9 in June while Composite PMI grew from 37 to 47.9. Both reports were above expectations.

The Bank of Canada published its business sentiment survey which showed that Canadian business sentiment remained strongly negative. Companies expect that sales will be soft for some time despite the fact that coronavirus restrictions were lifted.

Meanwhile, oil is providing additional support to the Canadian dollar as it finally managed to settle above the key $40 level and continues its upside move. Currently, oil does not have big upside momentum but this can change if it gets above the nearest resistance level at $41.50. This scenario will be bullish for the Canadian dollar and bearish for USD/CAD.

Technical Analysis

USD/CAD has declined closer to the support level at 1.3500 but stays inside the trading range between the support at 1.3500 and the 20 EMA at 1.3595.

A move below 1.3500 will be a major event for USD/CAD as it will mark the end of the current rebound attempt and signal the continuation of the previous downside trend.

In this scenario, USD/CAD will gain downside momentum and head towards the next support level at 1.3440 with good chances to get to the test of the following support level at 1.3360.

On the upside, a move above the 20 EMA will open the way to the test of the 50 EMA at 1.3675.

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