USD/CAD Loses Momentum After Facing Strong Resistance Near 1.2525

Key Insights

• WTI oil is under pressure, which is bearish for the Canadian currency. 
• However, USD/CAD faced significant resistance at 1.2525 and pulled back.
• A successful test of the 1.2500 level will push USD/CAD back to the support level at 1.2470.

U.S. Dollar Gains Some Ground Against Canadian Dollar

USD/CAD is currently trying to settle back below the 1.2500 level, while the U.S. dollar is gaining some ground against a broad basket of currencies.

The U.S. Dollar Index has recently faced resistance at 98.35 and pulled back towards the 98 level. If the U.S. Dollar Index settles below this level, it will head towards the support at the recent lows at 97.75, which will be bearish for USD/CAD.

Today, foreign exchange market traders focused on the economic data from the U.S. Initial Jobless Claims report indicated that 202,000 Americans filed for unemployment benefits in a week, compared to analyst consensus of 197,000.

Traders also took a look at Personal Income and Personal Spending reports for February. Personal Income increased by 0.5% month-over-month, in line with the analyst consensus. Personal Spending grew by 0.2%, while analysts expected that it would increase by 0.5%.

It should be noted that WTI oil has recently made an attempt to settle below the $100 level due to U.S. plans to release strategic reserves to cool down prices. In case WTI oil settles below the psychologically important $100 level, it will gain downside momentum, which will be bearish for commodity-related currencies, including Canadian dollar.

Technical Analysis

USD to CAD has recently moved below the 1.2500 level. In case USD to CAD settles below this level, it will head towards the support at 1.2470.

A successful test of the support at 1.2470 will push USD to CAD towards the support at 1.2450. If USD to CAD manages to settle below the support at 1.2450, it will move towards the next support level, which is located at 1.2425.

On the upside, a move above 1.2500 will open the way to the test of the resistance at 1.2525. In case USD to CAD climbs above this level, it will head towards the next resistance at 1.2550. A move above 1.2550 will push USD to CAD towards the resistance near the 20 EMA at 1.2590.

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