USD/CAD Daily Forecast – Canadian Dollar Remains Under Strong Pressure Ahead Of The Weekend

U.S. Dollar Stays Strong Against Canadian Dollar

USD/CAD made an attempt to settle above the resistance at 1.2480 but lost momentum and pulled back towards 1.2420 while the U.S. dollar gained ground against a broad basket of currencies.

The U.S. Dollar Index has recently tried to get to the test of the resistance at 92.50 but failed to develop sufficient upside momentum and pulled back towards the support at 92.15. In case the U.S. Dollar Index declines below this level, it will head towards the support at 92 which will be bearish for USD/CAD.

Today, foreign exchange market traders had a chance to take a look at Canadas New Housing Price Index for May. The Index increased by 1.4% month-over-month compared to analyst forecast which called for growth of 0.6%. On a year-over-year basis, New Housing Price Index increased by 11.3% compared to analyst forecast of 8.5%.

Commodity markets tried to rebound today, but Canadian dollar remained under strong pressure. The current situation looks like a major short squeeze for those who were shorting the U.S. dollar, so USD/CAD may ignore the dynamics of commodity markets even if they move higher.

Technical Analysis

USD to CAD is currently trying to stay above the support at 1.2420. RSI is in the overbought territory, and the risks of a pullback continue to increase. In case USD to CAD stays above 1.2420, it will head towards the resistance at 1.2450.

A successful test of the resistance at 1.2450 will push USD to CAD towards the next resistance level which is located at the recent highs at 1.2480. In case USD to CAD gets above this level, it will move towards the resistance at 1.2530.

On the support side, a move below the support at 1.2420 will open the way to the test of the next support level at 1.2385. If USD to CAD manages to settle below this level, it will gain additional downside momentum and head towards the support at 1.2350.