USD/CAD Tests Support At 1.2680

Canadian Dollar Gains More Ground Against U.S. Dollar

USD/CAD is currently trying to settle below the support at 1.2680 while U.S. dollar is losing ground against a broad basket of currencies.

The U.S. Dollar Index has recently made an attempt to settle below the support level at 96.25 but failed to develop sufficient downside momentum and rebounded closer to the resistance at 96.50. In case the U.S. Dollar Index settles above this resistance level, it will head towards the resistance at 96.70 which will be bullish for USD/CAD.

Today, U.S. released the final reading of Manufacturing PMI report for January which indicated that Manufacturing PMI declined from 57.7 in December to 55.5 in January compared to analyst consensus of 55. ISM Manufacturing PMI decreased from 58.8 (revised from 58.7) to 57.6, mostly in line with the analyst consensus of 57.5.

Foreign exchange market traders also had a chance to take a look at Canada’s Manufacturing PMI report which indicated that Manufacturing PMI declined from 56.5 to 56.2 compared to analyst forecast of 56.

Traders will also continue to monitor the developments in oil markets as WTI oil is currently trying to settle above the $88 level. A move above this level will push WTI closer to the psychogically important $90 level which will be bullish for commodity-related currencies, including Canadian dollar.

Technical Analysis

USD to CAD is testing the support level at 1.2680. In case USD to CAD manages to settle below this support level, it will get to another test of the support which is located at the 50 EMA at 1.2665.

A move below the 50 EMA will open the way to the test of the support at 1.2650. If USD to CAD declines below this level, it will head towards the next support at 1.2625.

On the upside, the previous support at 1.2710 will serve as the first resistance level for USD to CAD. In case USD to CAD climbs back above this level, it will head towards the resistance at 1.2730. A successful test of this level will push USD to CAD towards the next resistance at 1.2760.

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