USD/CAD Exchange Rate Prediction – USD/CAD Close Above 100-day Moving Average Following GDP

The USD/CAD continued to rally on Tuesday, closing above former resistance now support but forming a doji day which is a sign of indecision.  The better than expected Canadian GDP report helped the Loonie hold its own despite a dollar rally against most major currencies. In the U.S. yields moved lower despite more substantial than expected ADP private payrolls and Pending Home Sales. The surprise of the day was U.S. Pending Home sales which which measures signed contracts on existing homes, rose 8% in May compared with April. While the Chicago PMI came in slightly softer than expected it remained well above the expansion, contraction level.

Technical Analysis

The USD/CAD continued to rally on Wednesday and closed above resistance near the 100-day moving average seen near 1.2390, which his now seen as support. Resistance is seen near the June highs at 1.2486. The 10-day moving average is poised to cross above the 100-day moving average which means that a short-term uptrend is now in place. Short-term momentum is positive as the fast stochastic generated a crossover buy signal. The MACD (moving average convergence divergence) histogram is printing in positive territory with a declining trajectory which points to consolidation.

Canadian GDP Fell Less than Expected

Canada’s economy shrank less than expected during a spring surge of COVID-19 cases, continuing its run of surprising strength. Economists predict the country will recover to pre-pandemic levels of output in the third quarter, barring any further setbacks with the virus. According to estimates from Statistics Canada, gross domestic product contracted by 0.3% April and by a similar amount in May. Economists had been anticipating a drop of 0.8% in April.