USD/CAD Tests Resistance At 1.2890

Key Insights

• Demand for safe-haven assets pushed the U.S. dollar higher.
• High oil prices failed to provide enough support to the Canadian dollar. 
• A move above 1.2890 will push USD/CAD towards the resistance at 1.2915.

Canadian Dollar Is Losing Ground Against U.S. Dollar

USD/CAD is currently trying to settle above the resistance at 1.2890, while the U.S. dollar is mostly flat against a broad basket of currencies.

The U.S. Dollar Index is stuck in the range between the support at 99 and the resistance at 99.20. If the U.S. Dollar Index manages to settle above 99.20, it will move towards the resistance at 99.45, which will be bullish for USD/CAD.

Today, WTI oil made an attempt to settle above $129.50, but this move failed to provide enough support to the Canadian dollar. Commodity rally continues, but commodity-related currencies are not performing as strong as foreign exchange market traders could have expected in such a scenario.

In this environment, traders will stay focused on geopolitical news, which will remain the key driver for global markets in the upcoming days. At this point, commodity prices have risen to the levels that will put pressure on the world economy, so demand for the safe-haven U.S. dollar stays strong.

Technical Analysis

USD to CAD is testing the resistance at 1.2890. In case this test is successful, USD to CAD will move towards the next resistance level at 1.2915. RSI remains in the moderate territory, and there is plenty of room to gain additional upside momentum in case the right catalysts emerge.

A move above the resistance at 1.2915 will push USD to CAD towards the resistance at 1.2940. If USD to CAD gets above this level, it will head towards the next resistance at December highs at 1.2965.

On the support side, a move below 1.2890 will push USD to CAD towards the support level at 1.2850. In case USD to CAD declines below this level, it will head towards the next support at 1.2830. A successful test of this support level will push USD to CAD towards the support at 1.2800.

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