USD/CAD Remains Stuck Near 1.2500

U.S. Dollar Is Mostly Flat Against Canadian Dollar

USD/CAD is currently trying to settle back above 1.2500 while U.S. dollar is under pressure against a broad basket of currencies.

The U.S. Dollar Index continues its attempts to settle below the support level at the 50 EMA near 95.55. If the U.S. Dollar Index manages to settle below this level, it will head towards the next support at 95.40 which will be bearish for USD/CAD.

Today, foreign exchange market traders focused on inflation reports from Canada. Inflation Rate declined by 0.1% month-over-month in December. On a year-over-year basis, Inflation Rate increased by 4.8%. Both reports were in line with analyst estimates. Interestingly, Core Inflation Rate grew by 4% year-over-year compared to analyst consensus which called for growth of 3.5%.

In the U.S., Building Permits increased by 9.1% month-over-month in December while analysts expected that they would grow by just 0.4%. Housing Starts grew by 1.4% compared to analyst consensus which called for a decline of 2%.

Traders also monitored the developments in commodity markets. WTI oil managed to settle above the $87 level and moved to multi-year highs, which was bullish for commodity-related currencies, including Canadian dollar.

Technical Analysis

USD to CAD is trading near the resistance level at 1.2500. In case USD to CAD manages to settle back above this level, it will move towards the next resistance at 1.2525.

A successful test of the resistance at 1.2525 will push USD to CAD towards the next resistance at 1.2550. If USD to CAD gets above this level, it will continue its rebound and head towards the resistance level at 1.2590.

On the support side, USD to CAD needs to settle below 1.2500 to have a chance to gain downside momentum in the near term. The next support level for USD to CAD is located at 1.2475.

A move below 1.2475 will open the way to the test of the support which is located near today’s lows at 1.2450. In case USD to CAD declines below this level, it will head towards the next support level at 1.2425.

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