USD/CAD Daily Forecast – Canadian Dollar Stays Strong

USD/CAD Video 10.02.21.

Canadian Dollar Continues To Gain Ground Against U.S. Dollar

USD/CAD made an attempt to settle below the support at 1.2665 while the U.S. dollar remained under pressure against a broad basket of currencies.

The U.S. Dollar Index settled below the support level at 90.50 but received strong support near 90.30. If the U.S. Dollar Index declines below this level, it will head towards the next support at 90.00 which will be bearish for USD/CAD.

Today, the U.S. reported that Inflation Rate increased by 1.4% year-over-year in January compared to analyst forecast of 1.5%. Core Inflation Rate was also below analyst expectations.

The reports put some pressure on the American currency but the U.S. dollar did not manage to gain strong downside momentum. Foreign exchange market traders continue to wait for another round of U.S. economic stimulus which will likely be close to the original $1.9 trillion proposal as inflation is not moving higher.

Tomorrow, traders’ focus will shift from inflation data to job market data as the U.S. will release Initial Jobless Claims and Continuing Jobless Claims reports. Initial Jobless Claims are expected to decline from 779,000 to 757,000 while Continuing Jobless Claims are projected to decrease from 4.59 million to 4.49 million.

Technical Analysis

USD to CAD declined below the support at 1.2700 and tested the support level at 1.2665. If USD to CAD manages to settle below this support level, it will head towards the next support at 1.2625.

RSI remains in the moderate territory, and there is plenty of room to gain additional downside momentum in case the right catalysts emerge. If USD to CAD settles below the support at 1.2625, it will move towards the next support level which is located at yearly lows at 1.2590.

On the upside, the previous support level at 1.2700 will serve as the first resistance level for USD to CAD. If USD to CAD gets above this level, it will head towards the next resistance at 1.2720. A move above 1.2720 will open the way to the test of the resistance at the 20 EMA at 1.2750.

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