USD/CAD Tests Support At 1.2710

U.S. Dollar Is Losing Ground Against Canadian Dollar

USD/CAD is currently trying to settle below the support level at 1.2710 while U.S. dollar is under strong pressure against a broad basket of currencies.

The U.S. Dollar Index settled below the support at the 97 level and is trying to get to the test of the next support at 96.70. In case the U.S. Dollar Index manages to settle below 96.70, it will move towards the next support at 96.50 which will be bearish for USD/CAD.

Today, foreign exchange market traders had a chance to take a look at Producer Prices reports from Canada. The reports indicated that Producer Prices increased by 0.7% month-over-month in December compared to analyst forecast which called for growth of 1.5%. On a year-over-year basis, Producer Prices grew by 16.1%.

In the U.S., traders focused on Chicago PMI report which indicated that Chicago PMI grew from 64.3 in December to 65.2 in January compared to analyst consensus of 61.7.

Traders also continued to monitor the developments in the oil markets. WTI oil has recently made an attempt to settle below the $87 level but failed to develop sufficient downside momentum. The nearest resistance for WTI oil is located at $88 level. A move above this level will open the way to the test of the $90 level which will be bullish for commodity-related currencies, including Canadian dollar.

Technical Analysis

USD to CAD is testing the support level at 1.2710. In case USD to CAD manages to settle below this level, it will move towards the next support at 1.2680.

A move below the support at 1.2680 will push USD to CAD towards the next support at the 50 EMA at 1.2665. If USD to CAD manages to get below the 50 EMA, it will head towards the support level which is located near the 20 EMA at 1.2650.

On the upside, the nearest resistance level for USD to CAD is located at 1.2730. If USD to CAD gets back above this level, it will move towards the next resistance at 1.2760.

A successful test of the resistance at 1.2760 will push USD to CAD towards the next resistance at 1.2780. In case USD to CAD moves above this level, it will head towards the resistance at 1.2800.

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