USD/CAD Stays Range-Bound

Canadian Dollar Lacks Momentum

USD/CAD is stuck in a tight range between the 50 EMA at 1.2665 and the resistance at 1.2680 while U.S. dollar is losing ground against a broad basket of currencies.

The U.S. Dollar Index gained strong downside momentum and is testing the support level at 95.40. The dollar’s weakness is driven by ECB comments, which were interpreted as more hawkish and pushed EUR/USD higher. In case the U.S. Dollar Index manages to settle below 95.40, it will head towards the support level at 95.20 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 238,000 Americans filed for unemployment benefits in a week compared to analyst consensus of 245,000. Continuing Jobless Claims declined from 1.67 million to 1.63 million.

The final reading of Services PMI report for January indicated that Services PMI decreased from 57.6 to 51.2 compared to analyst consensus of 50.9. Factory Orders declined by 0.4% month-over-month in December while analysts expected that they would decrease by 0.2%.

Technical Analysis

USD to CAD has recently made another attempt to settle below the support level at the 50 EMA at 1.2665 but failed to develop sufficient downside momentum. The nearest resistance level for USD to CAD is located at 1.2680.

In case USD to CAD gets above 1.2680, it will head towards the resistance at 1.2710. A move above 1.2710 will open the way to the test of the resistance at 1.2730. If USD to CAD manages to settle above this level, it will head towards the resistance level at 1.2760.

On the support side, USD to CAD needs to settle below the 50 EMA to have a chance to gain downside momentum in the near term. The next support level for USD to CAD is located at 1.2650.

In case USD to CAD declines below 1.2650, it will head towards the next support level at 1.2625. A move below the support at 1.2625 will push USD to CAD towards the support level at 1.2590.

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