USD/CAD Daily Forecast – U.S. Dollar Rebounds After Testing New Lows

USD/CAD Video 04.01.21.

Canadian Dollar Is Losing Ground At The Beginning Of The Week

USD/CAD is trying to settle above the resistance at 1.2775 after testing multi-month lows at 1.2665 while the U.S. dollar is rebounding against a broad basket of currencies.

Earlier, the U.S. Dollar Index managed to get below 89.50 but failed to gain additional downside momentum and is currently trying to settle above the resistance at 89.75. If this attempt is successful, the U.S. Dollar Index will move towards the next resistance level at 90 which will be bullish for USD/CAD.

Today, foreign exchange market traders had a chance to take a look at the final readings of Manufacturing PMI reports from U.S. and Canada. In the U.S., Manufacturing PMI increased from 56.7 in November to 57.1 in December compared to analyst consensus of 56.5. In Canada, Manufacturing PMI grew from 55.8 to 57.9 compared to analyst forecast of 56.

Interestingly, strong PMI reports did not provide additional support to the Canadian dollar. It looks like traders have decided to take some profits off the table at the beginning of the year after dollars strong downside move at the end of the previous year.

Technical Analysis

USD to CAD gained upside momentum and is trying to settle above the resistance at 1.2775. In case USD to CAD manages to settle above this level, it will head towards the next resistance which is located near the 20 EMA at 1.2800. A move above the resistance at 1.2800 will push USD to CAD towards the resistance at 1.2835.

On the support side, the nearest support level for USD to CAD is located at 1.2750. A move below 1.2750 will push USD to CAD towards the next support level at 1.2720. In case USD to CAD declines below 1.2720, it will head towards the next support level at 1.2700.

If USD to CAD manages to settle below the support at 1.2700, it will gain additional downside momentum and head towards the next support level which is located at the recent lows at 1.2665.