USD/CAD Daily Forecast – U.S. Dollar Moves Higher After Yesterday’s Sell-Off

USD/CAD Video 18.03.21.

Canadian Dollar Is Losing Ground Against U.S. Dollar

USD/CAD  is currently trying to settle above the resistance at 1.2450 while the U.S. dollar is gaining ground against a broad basket of currencies.

The U.S. Dollar Index managed to settle above the resistance at 91.75 and made an attempt to get to the test of the next resistance level at 92 but failed to develop sufficient upside momentum. In case the U.S. Dollar Index manages to get to the 92 level, USD/CAD will get additional support.

Today, the U.S. reported that Initial Jobless Claims increased from 725,000 (revised from 712,000) to 770,000 while Continuing Jobless Claims declined from 4.14 million to 4.12 million. Both reports were worse than analysts expected.

In Canada, ADP Employment Change report indicated that private businesses lost 100,800 jobs in February compared to analyst consensus which called for creation of 190,000 jobs. It should be noted that ADP Employment Change report for January was revised from -231,200 to -65,800 which explains the major difference between analyst expectations and the actual report for February.

Meanwhile, foreign exchange market traders remained focused on the developments in U.S. government bond markets. Treasury yields moved to new highs as traders continued to bet on higher inflation. Higher Treasury yields provided support to U.S. dollar.

WTI oil gained strong downside momentum as the coronavirus situation in Europe continued to get worse, which put some pressure on commodity-related currencies including Canadian dollar.

Technical Analysis

USD to CAD managed to get above the resistance at 1.2425 and is trying to settle above the next resistance level at 1.2450. In case this attempt is successful, USD to CAD will head towards the next resistance level which is located at 1.2470.

A move above the resistance at 1.2470 will open the way to the test of the next resistance level at 1.2500.

On the support side, the previous resistance at 1.2425 will serve as the first support level for USD to CAD. In case USD to CAD manages to get above this level, it will head towards the next support at 1.2400. If USD to CAD declines below 1.2400, it will move towards the support at the recent lows at 1.2365.

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