USD/CAD Daily Forecast – Canadian Dollar Retreats As Oil Prices Pull Back

U.S. Dollar Moves Higher Against Canadian Dollar

USD/CAD is currently trying to stay above the 20 EMA at 1.2415 while the U.S. dollar is flat against a broad basket of currencies.

The U.S. Dollar Index remains stuck in the 94 – 94.20 range, and it will likely continue to trade in this range before the Fed Interest Rate Decision. If the Fed focuses on inflation in its commentary, the U.S. Dollar Index will move above 94.20 and head towards the resistance at 94.50 which will be bullish for USD/CAD.

Today, foreign exchange market traders had a chance to take a look at ADP Employment Change report which showed that U.S. private businesses added 571,000 jobs in October compared to analyst consensus of 400,000.

U.S. Services PMI increased from 54.9 in September to 58.7 in October, while analysts expected that it would grow to 58.2. Factory Orders orders grew by 0.2% month-over-month in September.

Meanwhile, WTI oil found itself under strong pressure after EIA Weekly Petroleum Status Report showed that crude inventories increased by 3.3 million barrels. Currently, WTI oil is trying to settle below the $81 level. If this attempt is successful, it will move towards the psychologically important $80 level which will be bearish for commodity-related currencies, including Canadian dollar.

Technical Analysis

USD to CAD made an attempt to settle above the resistance at 1.2450 but lost momentum and pulled back towards the 20 EMA at 1.2415. In case USD to CAD settles back below the 20 EMA, it will move towards the support at 1.2400.

A successful test of the support at 1.2400 will push USD to CAD towards the support level at 1.2380. If USD to CAD declines below this level, it will move towards the support level at 1.2340.

On the upside, USD to CAD needs to stay above the 20 EMA to have a chance to develop upside momentum in the near term. The next resistance level is located at 1.2450.

In case USD to CAD gets above 1.2450, it will move towards the 50 EMA at 1.2485. A successful test of the resistance at the 50 EMA will open the way to the test of the next resistance at 1.2500.

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