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USD/CAD Daily Forecast – Resistance At 1.2685 Stays Strong

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·2 min read
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U.S. Dollar Gains Some Ground Against Canadian Dollar

USD/CAD has recently made an attempt to settle above the resistance at 1.2685 but failed to develop sufficient upside momentum and pulled back while the U.S. dollar remained under pressure against a broad basket of currencies.

The U.S. Dollar Index tested support at the 50 EMA at 92.45 but did not manage to settle below this level. The nearest resistance level for the U.S. Dollar Index is located at the 20 EMA at 92.60. In case the U.S. Dollar Index manages to get back above this level, it will move towards the resistance at 92.80 which will be bullish for USD/CAD.

Today, U.S. reported that Inflation Rate increased by 5.3% year-over-year in August, in line with the analyst consensus. Core Inflation Rate grew by 4% year-over-year compared to analyst consensus which called for growth of 5.2%.

The reports have put some pressure on the American currency as they indicated that inflation remained under control. However, there was no real sell-off. Meanwhile, the yield of 10-year Treasuries moved below 1.30% as bond traders purchased U.S. government bonds after the release of inflation reports. In case Treasury yields continue to move lower, U.S. dollar may find itself under more pressure.

Technical Analysis

USD to CAD managed to settle above 1.2650 and tested the resistance level at 1.2685. In case USD to CAD manages to settle above this level, it will head towards the next resistance at 1.2710.

A successful test of the resistance at 1.2710 will open the way to the test of the resistance at 1.2730. If USD to CAD gets above the resistance at 1.2730, it will head towards the next resistance level which is located at 1.2760.

On the support side, the nearest support level for USD to CAD is located at 1.2650. A move below this level will push USD to CAD towards the support at the 20 EMA at 1.2630.

If USD to CAD declines below the 20 EMA, it will head towards the support level at 1.2590. A successful test of this level will push USD to CAD towards the 50 EMA at 1.2580.

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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