USD/CAD Daily Forecast – Resistance At The 20 EMA Stays Strong

USD/CAD Video 02.07.20.

Canadian Dollar Is Mostly Flat As WTI Oil Fails To Gain Momentum Above $40

USD/CAD  continues to trade below the 20 EMA at 1.3615 as the U.S. dollar is mostly flat against a broad basket of currencies while WTI oil is testing the $40 level.

The U.S. Dollar Index tried to settle below the 97 level but received material support and returned back into the 97 – 97.5 range.

Today, the U.S. has released many employment reports which provided support to global markets as they showed signs of recovery.

Non Farm Payrolls report indicated that as much as 4.8 million jobs were added in June, while Unemployment Rate declined to 11.1%. There is a reason for caution as Initial Jobless Claims remained high at 1.43 million while Continuing Jobless Claims were 19.3 million.

However, markets are ready to shrug off any worrisome data if any report provides a reason for optimism so traders did not pay much attention to Initial Jobless Claims and Continuing Jobless Claims reports.

In turn, Canada released the final reading of Manufacturing PMI for June which showed that Manufacturing PMI increased from 40.6 to 47.8. Numbers below 50 show contraction.

Technical Analysis

USD/CAD did not manage to settle above the 20 EMA at 1.3615 and continues to trade in a range between the support at 1.3500 and the 20 EMA. Currently, USD/CAD stays close to the high end of this range and makes attempts to get above the 20 EMA.

If these attempts are successful, USD/CAD will head towards the next resistance level at the 50 EMA at 1.3700.

Back in June, USD/CAD spent many trading sessions between the support at 1.3500 and the 20 EMA, and history may repeat itself in case neither the U.S. dollar nor the Canadian dollar get enough catalysts for a decisive move.

The U.S. Dollar Index looks stuck in the 97 – 97.5 range. Without a move out of this range, USD/CAD could have problems with developing significant momentum.

On the support side, a move below 1.3500 will lead to increased interest in USD/CAD as bears will try to create more downside momentum and push it closer to the next support at 1.3440.

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