USD/CAD Daily Forecast – U.S. Dollar Gains More Ground Against Canadian Dollar

Weak Oil Puts More Pressure On Canadian Dollar

USD/CAD is currently trying to settle above the resistance at 1.2550 while the U.S. dollar is gaining some ground against a broad basket of currencies.

The U.S. Dollar Index managed to settle above the 92 level and is trying to settle above the next resistance at 92.15. If this attempt is successful, the U.S. Dollar Index will move towards the 20 EMA at 92.30 which will be bullish for USD/CAD.

Today, U.S. reported that Factory Orders increased by 1.5% month-over-month in June compared to analyst consensus which called for growth of 1%. Foreign exchange market traders also had a chance to take a look at Canada’s Manufacturing PMI report for July which indicated that Manufacturing PMI declined from 56.5 in June to 56.2 in July compared to analyst forecast of 57.

Meanwhile, WTI oil continued to move lower amid worries about the spread of the Delta variant of coronavirus in China. WTI oil made an attempt to settle below the psychologically important $70 level but failed to develop sufficient downside momentum and rebounded closer to the $71 level. If WTI oil settles below $70, it will move towards the next significant support level at $68.50 which will be bearish for commodity-related currencies, including Canadian dollar.

Technical Analysis

USD to CAD is currently testing the resistance level at 1.2550. In case this test is successful, USD to CAD will move towards the next resistance which is located at 1.2590.

If USD to CAD manages to settle above the resistance at 1.2590, it will head towards the resistance at 1.2625. A move above this level will open the way to the test of the resistance at 1.2650.

On the support side, the previous resistance level at the 20 EMA near 1.2520 will serve as the first support level for USD to CAD. A successful test of the support at the 20 EMA will push USD to CAD towards the support at 1.2500. If USD to CAD gets below this level, it will head towards the support at 1.2480.

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

This article was originally posted on FX Empire

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