USD/CAD Daily Forecast – Canadian Dollar Retreats At The Start Of The Week

USD/CAD 12.04.21

U.S. Dollar Gains Ground Against Canadian Dollar

USD/CAD is currently trying to settle back above the resistance at 1.2550 while the U.S. dollar is losing some ground against a broad basket of currencies.

The U.S. Dollar Index managed to get below the support at 92.15 but failed to settle below the next support level at 92. If the U.S. Dollar Index gets back above 92.15, it will head towards the 20 EMA at 92.30 which will be bullish for USD/CAD.

Today, the Bank of Canada released its Business Outlook Survey which indicated that Business Outlook Survey Indicator increased from 1.3 in the fourth quarter of 2020 to 2.9 in the first quarter of 2021.

The report did not provide additional support to the Canadian dollar on the foreign exchange market, and Canadian currency found itself under some pressure against U.S. dollar at the beginning of the week.

While WTI oil made an attempt to settle above the psychologically important $60 level after an attack on Irans nuclear plant which caused an electricity outage, other commodities were under pressure which was bearish for commodity-related currencies. Meanwhile, the situation with coronavirus in India is getting worse which may serve as an additional bearish catalyst for commodity-related currencies like Canadian dollar.

Technical Analysis

USD to CAD failed to settle below the support at 1.2525 and is trying to settle above the nearest resistance at 1.2550. The next resistance level is located at the 20 EMA at 1.2565.

If USD to CAD gets above the resistance at the 20 EMA, it will move towards the next resistance at 1.2590. A successful test of this resistance level will push USD to CAD towards the 50 EMA which is located at 1.2600.

On the support side, the nearest support level for USD to CAD is still located at 1.2525. If USD to CAD declines below this level, it will move towards the next support at 1.2500. A successful test of the support at 1.2500 will push USD to CAD towards the support at 1.2470.