USD/CAD Retreats As Treasury Yields Pull Back

Canadian Dollar Gains Ground Against U.S. Dollar

USD/CAD is currently trying to settle below the support level at 1.2475 while U.S dollar is moving lower against a broad basket of currencies.

The U.S. Dollar Index remains stuck near the 50 EMA at 95.55. In case the U.S. Dollar Index manages to settle below this level, it will get to the test of the next support level at 95.40 which will be bearish for USD/CAD.

Today, foreign exchange market traders focused on the economic data from U.S. Initial Jobless Claims report indicated that 286,000 Americans filed for unemployment benefits in a week compared to analyst consensus of 220,000.

Continuing Jobless Claims increased from 1.55 million (revised from 1.56 million) to 1.64 million compared to analyst consensus of 1.58 million. Existing Home Sales declined by 4.6% month-over-month in December compared to analyst consensus of -2%.

In Canada, ADP Employment Change report indicated that employment in Canada increased by 19,200 compared to analyst forecast of 140,000.

Traders also continued to monitor the developments in U.S. government bond markets. Treasury yields have pulled back from their recent highs, which was bearish for the American currency.

Technical Analysis

USD to CAD managed to settle below the support at 1.2500 and is trying to settle below the next support level at 1.2475. In case this attempt is successful, USD to CAD will get to the test of the next support at 1.2450.

If USD to CAD manages to settle below 1.2450, it will head towards the next support level at 1.2425. A successful test of this level will push USD to CAD towards the support at 1.2400.

On the upside, the previous support at 1.2500 will serve as the first resistance level for USD to CAD. In case USD to CAD manages to settle back above this level, it will head towards the next resistance level at 1.2525. If USD to CAD moves above 1.2525, it will head towards the resistance at 1.2550.

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