USD/CAD Daily Forecast – Oil Rally Boosts Canadian Dollar

USD/CAD Video 10.12.20.

Canadian Dollar Gained Strong Upside Momentum

USD/CAD gained strong downside momentum and is trying to settle below 1.2720 while the U.S. dollar is losing ground against a broad basket of currencies and oil is testing new highs.

The U.S. Dollar Index did not manage to settle above the resistance at 91 and is currently located in the range between 90.80 and 91. If the U.S. Dollar Index declines below 90.80, it will gain downside momentum and put additional pressure on USD/CAD.

Oil has recently managed to get above the $47 level and provided material support to many commodity-related currencies on the foreign exchange market.

Today, U.S. reported that Initial Jobless Claims jumped to 853,000 while analysts expected that they would total just 725,000. Continuing Jobless Claims report was also disappointing as Continuing Jobless Claims increased from 5.53 million to 5.76 million compared to analyst consensus of 5.34 million.

Meanwhile, there are no signs of pricing pressure in the U.S. as Inflation Rate increased by 1.1% year-over-year in November while Core Inflation Rate grew by 1.6%.

Traders will continue to follow the latest news about U.S. stimulus negotiations. U.S. Treasury Secretary Steven Mnuchin has recently stated that negotiations made a lot of progress and that talks would continue. Additional stimulus may put some pressure on the American currency although it may have been already priced in by the market.

Technical Analysis

USD to CAD is currently trying to settle below the nearest support level at 1.2720. If this attempt is successful, USD to CAD will move towards the next support at 1.2700.

In case USD to CAD declines below the support at 1.2700, it will head towards the next support level at 1.2675.

I’d note that RSI is in the oversold territory so the risks of a pullback are high. A few trading sessions ago, USD to CAD started to rebound when RSI was in the same area.

On the upside, the previous support level at 1.2750 will likely serve as the first resistance level for USD to CAD. In case USD to CAD settles above this level, it will get to the test of the next resistance at 1.2775.

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