USD/CAD Daily Forecast – U.S. Dollar Rebounds Ahead Of The Weekend

USD/CAD

Canadian Dollar Is Losing Ground Against U.S. Dollar

USD/CAD gained strong upside momentum while the U.S. dollar gained ground against a broad basket of currencies.

The U.S. Dollar Index managed to get above the resistance at 90.50 and tested the next resistance level at 90.70 but failed to develop sufficient upside momentum and pulled back towards 90.60. If the U.S. Dollar Index settles above 90.70, it will move towards the 50 EMA at 90.95 which will be bullish for USD/CAD.

Today, U.S. reported that Retail Sales declined by 0.7% month-over-month in December as the second wave of the virus put pressure on consumers.

Meanwhile, U.S. Industrial Production increased by 1.6% month-over-month in December compared to analyst consensus which called for growth of 0.5%. Manufacturing Production was also better than expected as it grew by 0.9% compared to analyst consensus of 0.5%.

Today, commodity-related currencies found themselves under pressure on foreign exchange market as oil and other commodities gained downside momentum. If this sell-off continues, Canadian dollar will move lower.

Technical Analysis

USD to CAD made an attempt to settle above the resistance level at 1.2750 but pulled back towards 1.2720. If USD to CAD manages to stay above 1.2720, it will head towards the next resistance level at the 20 EMA at 1.2740.

A move above this level will push USD to CAD towards the resistance at 1.2750, so USD to CAD may face material resistance in the 1.2740 – 1.2750 area.

If USD to CAD manages to settle above the resistance at 1.2750, it will head towards the next resistance level which is located at 1.2775.

On the support side, the nearest support level for USD to CAD is located at 1.2700. If USD to CAD declines below this level, it will move towards the support at 1.2665. A successful test of this level will open the way to the test of the next support which is located near the recent lows at 1.2625.

From a big picture point of view, the current rebound is a major disappointment for USD to CAD bears as USD to CAD failed to settle below 1.2625 for the second time in January.