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USD/CAD Daily Forecast – Canadian Dollar Loses Ground Ahead Of The Weekend

Vladimir Zernov
·3 min read

USD/CAD Video 29.05.20.

U.S. Dollar Gains Ground As Canada Reports Grim GDP Numbers

USD/CAD tested the support level at 1.3730 but reversed course and climbed back to 1.3800 as the U.S. Dollar Index rebounded from the 98 level while Canada provided a disappointing GDP Growth Rate report.

Canada’s GDP Growth Rate in the first quarter was -2.1% quarter-on-quarter. GDP Growth Rate Annualized was -8.2% in the first quarter as the Canadian economy received a double hit from coronavirus and low energy prices. Canada expects that GDP growth declined by 11% in April.

The U.S. also reported grim economic data as Personal Spending was down by 13.6% as virus containment measures put significant pressure on consumer activity.

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The U.S. Dollar Index has recently breached the low end of the previous 99 – 101 range and tested the 98 level but started to rebound, providing additional boost to USD/CAD.

The equity markets are worried about an additional increase in U.S. – China tensions but the U.S. dollar has not received too much support despite its role of a safe haven asset.

Technical Analysis

USD/CAD has once again tested the nearest support level at 1.3730 but this attempt was unsuccessful. Instead of getting below 1.3730, USD/CAD gained significant near-term upside momentum and headed towards 1.3800.

Currently, USD/CAD is trading in the range between the support level at 1.3730 and the resistance level at 1.3850. The 20 EMA has recently crossed the 50 EMA to the downside, suggesting the increase in downside momentum, but USD/CAD will have to stay below 1.3850 to have material chances for additional downside.

In case USD/CAD manages to settle below 1.3730, it will head towards the next support level at 1.3650.

On the upside, USD/CAD will have to deal with the major resistance at 1.3850 which has previously served as the support level in a two-month trading range between 1.3850 and 1.4250.

In case USD/CAD gets above 1.3850, it will gain additional upside momentum and head towards the 20 EMA level at 1.3935. The 50 EMA is located close to the 20 EMA so this resistance level may be very significant.

If USD/CAD settles above both the 20 EMA and the 50 EMA, the next resistance will likely be seen closer to 1.4000.

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

 

This article was originally posted on FX Empire

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