USD/CAD Daily Forecast – Test Of Support At 1.2425

U.S. Dollar Is Losing Ground Against Canadian Dollar

USD/CAD is currently trying to settle below the 20 EMA at 1.2425 while the U.S. dollar is gaining ground against a broad basket of currencies.

The U.S. Dollar Index is currently testing the resistance level at 94.50. In case this test is successful, the U.S. Dollar Index will gain additional upside momentum and head towards the resistance at 94.75 which will be bullish for USD/CAD.

Today, foreign exchange market traders focused on inflation reports from U.S. The reports indicated that Inflation Rate grew by 0.9% month-over-month in October compared to analyst consensus of 0.6%. On a year-over-year basis, Inflation Rate grew by 6.2% while analysts expected that it would increase by 5.8%.

Higher-than-expected inflation reports provided material support to U.S. dollar which moved closer to yearly highs against a broad basket of currencies. However, the U.S. dollar is losing ground against Canadian dollar despite weakness in the oil market. Today, WTI oil gained downside momentum and managed to get below the $83 level. If the sell-off continues, Canadian dollar and other commodity-related currencies may find themselves under more pressure.

Technical Analysis

USD to CAD is testing the support at the 20 EMA at 1.2425. In case this test is successful, USD to CAD will move towards the next support level which is located near the recent lows at 1.2400.

A successful test of the support at 1.2400 will push USD to CAD towards the next support at 1.2380. If USD to CAD manages to settle below the support at 1.2380, it will continue its pullback and head towards the support level at 1.2350.

On the upside, the nearest resistance level for USD to CAD is located at 1.2450. In case USD to CAD moves back above this level, it will head towards the resistance at the 50 EMA at 1.2475.

A move above the resistance at the 50 EMA will push USD to CAD towards the resistance at 1.2500. If USD to CAD climbs above this level, it will move towards the next resistance level at 1.2530.

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