USD/CAD Rallies Amid Demand For Safe-Haven Assets

Canadian Dollar Retreats Against U.S. Dollar

USD/CAD is currently trying to settle above the 1.2700 level while U.S. dollar is moving higher against a broad basket of currencies.

The U.S. Dollar Index is testing the resistance at the 96 level. If this test is successful, the U.S. Dollar Index will move towards 96.25 which will be bullish for USD/CAD.

Today, foreign exchange market traders had a chance to take a look at flash readings of PMI reports from U.S. Manufacturing PMI declined from 57.7 in December to 55 in January compared to analyst consensus of 56.7. Services PMI decreased from 57.6 to 50.9 compared to analyst consensus of 55, and it looks that the spread of Omicron put significant pressure on the services segment.

S&P 500 is under significant pressure today while demand for safe-haven assets is increasing. In this environment, U.S. dollar gets more support. In addition, commodity-related currencies are losing ground amid sell-off in the oil markets, which is bullish for USD/CAD.

Technical Analysis

USD to CAD managed to get above the resistance at 1.2680 and is trying to get to the test of the next resistance level at 1.2710. RSI remains in the moderate territory, and there is plenty of room to gain additional momentum in case the right catalysts emerge.

If USD to CAD gets above 1.2710, it will head towards the resistance at 1.2730. A move above this level will open the way to the test of the resistance at 1.2760.

On the support side, the previous resistance at 1.2680 will serve as the first support level for USD to CAD. In case USD to CAD declines below this level, it will move towards the support level which is located at the 50 EMA at 1.2650.

A move below the 50 EMA will push USD to CAD towards the support at 1.2625. if USD to CAD manages to settle below the support at 1.2625, it will get to the test of the next support at the 20 EMA at 1.2610.

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