USD/CAD Moves Higher As Demand For Safe-Haven Assets Stays Strong

Key Insights

• Demand for the U.S. dollar stays strong as traders rush into safe-haven assets.
• Oil tests new highs but fails to provide enough support to the Canadian dollar. 
• A successful test of the resistance at 1.2780 will push USD/CAD towards 1.2800.

U.S. Dollar Gains Ground Against Canadian Dollar

USD/CAD is currently trying to settle above the resistance at 1.2780, while the U.S. dollar is gaining ground against a broad basket of currencies.

The U.S. Dollar Index is trying to move above the resistance at 99.20. In case this attempt is successful, the U.S. Dollar Index will get to the test of the next resistance at 99.45, which will be bullish for USD/CAD.

Today, foreign exchange market traders will focus on the general market sentiment and the dynamics of commodity markets. WTI oil failed to settle above the $127 level and moved towards the $120 level, but current prices are bullish for commodity-related currencies, including Canadian dollar.

The Canadian currency failed to gain ground against the U.S. currency as demand for safe-haven assets remained strong. The third round of negotiations between Russia and Ukraine has already begun, and markets will remain extremely sensitive to any geopolitical news.

Technical Analysis

USD to CAD has recently managed to settle back above 1.2750 and is testing the next resistance level, which is located at 1.2780. In case this test is successful, USD to CAD will move towards the next resistance at 1.2800.

A move above the resistance at 1.2800 will open the way to the test of the resistance at 1.2830. If USD to CAD gets above this level, it will move towards the resistance at 1.2850.

On the support side, the previous resistance at 1.2750 will serve as the first support level for USD to CAD. If USD to CAD manages to settle below this level, it will head towards the support at the 20 EMA at 1.2720. A successful test of the support at the 20 EMA will open the way to the test of the next support level at the 50 EMA at 1.2705.

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