USD/CAD Price Forecast – Test Of Resistance At 1.3035

Key Insights

• The U.S. dollar continues to rally against a broad basket of currencies as demand for safe-haven assets stays strong. 
• Commodity markets are under pressure, which is bearish for the Canadian currency. 
• A move above the resistance at 1.3035 will push USD/CAD towards the next resistance level at 1.3080.

Canadian Dollar Is Under Pressure Against U.S. Dollar

USD/CAD has recently settled back above the 1.3000 level as the U.S. Dollar Index moved to new highs. The American currency is boosted by the growing demand for safe-haven assets amid recession fears.

Traders remain concerned about the health of the world economy. WTI oil and copper, which are sensitive to economic outlook, are under pressure today.  Declining commodity markets are bearish for commodity-related currencies, including Canadian dollar.

It should be noted that the U.S. Dollar Index has settled in the overbought territory, so the risks of a pullback are increasing. The American currency has not been that strong since October 2002.

Meanwhile, the yield of 10-year Treasuries has stabilized near 3.00%. Treasury yields will likely remain volatile in the upcoming weeks ahead of the Fed Interest Rate Decision, which will be released on July 27.

USD/CAD Rebounds After The Recent Pullback

USD/CAD managed to settle above the resistance at 1.3000 and is testing the next resistance level at 1.3035. In case this test is successful, USD/CAD will move towards the next resistance, which is located at the recent highs at 1.3080.

A move above the resistance at 1.3080 will open the way to the test of the resistance at 1.3110. In case USD/CAD manages to settle above this level, it will head towards the resistance at 1.3150.

On the support side, the previous resistance at 1.3000 will serve as the first support level for USD/CAD. A successful test of this level will push USD/CAD towards the support at 1.2970. If USD/CAD declines below 1.2970, it will head towards the next support level at 1.2940.

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