USD/CAD Daily Forecast – Weak Oil Puts Pressure On The Canadian Dollar

USD/CAD Video 24.07.20.

U.S. Dollar Tries To Rebound After Recent Sell-Off

USD/CAD rebounded back above 1.3400 despite the broad weakness of the U.S. dollar as WTI oil fell below the key support at $41.50, putting pressure on commodity-related currencies.

The U.S. Dollar Index, which measures the strength of the U.S. dollar against a broad basket of currencies, has settled below the key support level at 94.65 and continues to trend lower.

In case the U.S. Dollar Index continues to lose ground, USD/CAD will find itself under pressure unless oil drops lower.

The U.S. has recently provided Flash Manufacturing PMI and Flash Services PMI data for July. Manufacturing PMI increased from 49.8 in June to 51.3 in July, mostly in line with analyst consensus of 51.5. Numbers above 50 show expansion.

Meanwhile, Services PMI grew from 47.9 to 49.6 while analysts expected that it will manage to get into the positive territory at 51. The continued weakness in the Services segment is likely related to the worsening coronavirus situation in the U.S.

U.S. New Home Sales increased by 13.8% in June on a month-over-month basis while analysts expected growth of just 4%. In addition, May growth was revised from 16.6% to 19.4%.

The strength in New Home Sales is likely due to virus worries and the desire to put money into a stable asset at a time when interest rates are near zero.

Technical Analysis

USD to CAD rebounded from the support level at 1.3360 and is trying to settle above 1.3400.

The nearest resistance level for USD to CAD is located at 1.3440. This resistance level has just been tested and proved its strength.

In case USD to CAD manages to get above this level, it will head towards the major resistance level at 1.3500. If this happens, I’d expect significant trader interest near 1.3500 as a move above this level may lead to a material upside move.

On the support side, the nearest support at 1.3360 has been confirmed. In case USD to CAD settles below this support level, it will head towards the low of the previous downside move at 1.3315.

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