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USD/CAD Daily Forecast – Major Support At 1.3850 In Sight

Vladimir Zernov

USD/CAD Video 19.05.20.

USD/CAD Continues Its Downside Move

USD/CAD heads to test the support level at 1.3850 as the U.S. dollar stays under pressure against a broad basket of currencies. The U.S. Dollar Index has declined to 99.5 after testing the 100.5 level just a few days ago.

Interestingly, the Canadian dollar continues to gain ground against the U.S. dollar despite some softness on the oil price front following the recent upside move.

The U.S. has recently provided another portion of grim economic data as Building Permits declined by 20.8% month-over-month while Housing Starts decreased by 30.2% month-over-month in April.

In recent days, the demand for safe haven assets has shifted into the precious metal segment, particularly into silver, while the U.S. dollar suffered a decline following the positive news about a potential vaccine for COVID-19.

It remains to be seen whether this trend will stay intact in the upcoming trading sessions. In case the U.S. dollar stays under pressure against a broad basket of currencies, USD/CAD will have a good chance to get below the major support level at 1.3850.

However, it should be noted that the U.S. Dollar Index has solid support near the 99 level while the market will soon have to digest another U.S. Initial Jobless Claims report, which is set to be released on Thursday.

The report is expected to show that 2.4 million Americans filed for unemployment benefits in a week. If the actual number is bigger, demand for safe haven assets like the U.S. dollar may increase, providing support to USD/CAD.

Technical Analysis

USD/CAD has good chances to test the major support level at 1.3850. The pair has already made two attempts to get below this level, and each attempt was met with increased buying activity which led to a rebound above 1.4100.

However, the latest rebound from 1.3900 met resistance at a lower level than the previous rebounds so chances for a downside breakout have increased.

In case USD/CAD settles below 1.3850, it will likely gain additional downside momentum and head towards 1.3750.

On the upside, the nearest resistance for USD/CAD is located at the 50 EMA at 1.3985, followed by resistance at the 20 EMA at 1.4030.

 

This article was originally posted on FX Empire

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