USD/CAD Tests Support At The 50 EMA

U.S. Dollar Is Losing Ground Against Canadian Dollar

USD/CAD has recently tested the 50 EMA at 1.2685 while U.S. dollar declined against a broad basket of currencies.

The U.S. Dollar Index is currently testing the support level at the 50 EMA at 95.80. In case the U.S. Dollar Index manages to settle below this level, it will head towards the next support level at 95.40 which will be bearish for USD/CAD.

Today, foreign exchange market traders had a chance to take a look at Retail Sales data report from the U.S. which indicated that Retail Sales increased by 3.8% month-over-month in January compared to analyst consensus of 2%. Industrial Production increased by 1.4% month-over-month compared to analyst consensus which called for growth of 0.4% while Manufacturing Production grew by 0.2%.

In Canada, inflation reports showed that Inflation Rate increased by 0.9% month-over-month in January compared to analyst consensus of 0.6%. On a year-over-year basis, Inflation Rate grew by 5.1%. Core Inflation Rate increased by 4.3% year-over-year.

Meanwhile, WTI oil moved closer to the $95 level, providing material support to commodity-related currencies, including Canadian dollar.

Technical Analysis

USD to CAD settled below the 20 EMA at 1.2700 and is testing the support at the 50 EMA at 1.2685. In case this test is successful, USD to CAD will head towards the support level which is located at 1.2650.

A move below the support at 1.2650 will open the way to the test of the support at 1.2625. If USD to CAD declines below this level, it will head towards the next support level at 1.2590.

On the upside, the previous support at the 20 EMA will serve as the first resistance level for USD to CAD. If USD to CAD manages to settle back above this level, it will get to the test of 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 gets above this level, it will head towards the resistance level at 1.2760.

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