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USD/CAD Daily Forecast – Canadian Dollar Declines Amid Sell-Off In Commodities

Vladimir Zernov
·2-min read

USD/CAD Video 22.01.21.

U.S. Dollar Moves Higher Ahead Of The Weekend

USD/CAD is currently trying to settle above the 20 EMA at 1.2725 while the U.S. dollar is mostly flat against a broad basket of currencies.

The U.S. Dollar Index has recently made an attempt to settle above the nearest resistance level at 90.30 but failed to develop sufficient upside momentum and pulled back closer to 90.15. If the U.S. Dollar Index gets above the 20 EMA, it will move towards 90.50 which will be bullish for USD/CAD.

Today, commodity-related currencies are under pressure due to the sell-off in commodity markets. If this sell-off continues, Canadian dollar will move lower.

The U.S. has recently reported that Manufacturing PMI increased from 57.1 in December to 59.1 in November while analysts expected that it would decline to 56.5. Services PMI report also exceeded expectations as Services PMI grew from 54.8 to 57.5 compared to analyst consensus of 53.6.

Meanwhile, Canada reported that Retail Sales increased by 1.3% month-over-month compared to analyst consensus which called for growth of just 0.1%. On a year-over-year basis, Retail Sales grew by 7.5%. Strong Retail Sales report failed to provide any support to the Canadian currency as foreign exchange market traders focused on the sell-off in commodity markets.

Technical Analysis

USD to CAD is currently testing the resistance at the 20 EMA at 1.2725. If this test is successful, USD to CAD will head towards the next resistance level at 1.2750.

In case USD to CAD manages to settle above 1.2750, it will move towards the resistance at 1.2775. A successful test of this level will push USD to CAD towards the next resistance level which is located near the 50 EMA at 1.2800.

On the support side, a move below the support at 1.2700 will open the way to the test of the next support level at 1.2665. If USD to CAD declines below the support at 1.2665, it will head towards the next support at 1.2625. A move below this level will push USD to CAD to the test of the recent lows at 1.2590.

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

This article was originally posted on FX Empire