USD/CAD Gains Ground As Treasury Yields Rise

U.S. Dollar Moves Higher Against Canadian Dollar

USD/CAD is currently trying to settle back above the resistance at 1.2550 while U.S. dollar is gaining ground against a broad basket of currencies.

The U.S. Dollar Index has recently managed to settle above the 50 EMA near 95.55 and is currently testing the next resistance level which is located at the 20 EMA near 95.70. In case this test is successful, the U.S. Dollar Index will head towards the 96 level which will be bullish for USD/CAD.

Today, foreign exchange market traders focused on the dynamics of U.S. government debt markets. The yield of 2-year Treasuries made an attempt to settle above the 1.05% level while the yield of 10-year Treasuries tested the 1.85% level.

At the start of this year, currency traders ignored rising yields. However, it looks that the recent move has finally provided enough support to the American currency. Most likely, traders will remain focused on the dynamics of U.S. government bond markets in the upcoming trading sessions. In case yields continue to increase, the safe-haven U.S. dollar may get more support.

It should be noted that Canadian dollar’s losses were limited as WTI oil managed to get above the psychologically important $85 level, which was bullish for commodity-related currencies.

Technical Analysis

USD to CAD is currently testing the resistance level at 1.2550. In case this test is successful, USD to CAD will move towards the next resistance level at 1.2590.

A move above 1.2590 will push USD to CAD towards the resistance which is located near the 20 EMA at 1.2625. If USD to CAD gets above this level, it will head towards the resistance at 1.2650.

On the support side, the previous resistance at 1.2525 will serve as the first support level for USD to CAD. In case USD to CAD moves back below this level, it will head towards the next support at 1.2500. A successful test of this support level will open the way to the test of the support at 1.2475.

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