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USD/CAD Daily Forecast – Strong Retail Sales Provide Support To U.S. Dollar

Vladimir Zernov

USD/CAD Video 16.06.20.

Canadian Dollar Gets Some Support From Stronger Oil

USD/CAD managed to gain some ground as the U.S. dollar recieved support after better-than-expected U.S. Retail Sales report.

In May, Retail Sales increased by 17.7% month-over-month compared to analyst expectations which called for growth of 8.0%.

Other economic reports were less optimistic. U.S. Industrial Production increased by 1.4% month-over-month, and the U.S. Manufacturing Production grew by 3.8%.

Things were not looking good on the year-over-year basis since Industrial Production declined by 15.3% while Manufacturing Production decreased by 16.5%.

Most likely, Retail Sales were boosted by the U.S. government’s efforts to provide direct support to citizens which boosted their ability to spend cash on purchases once the lockdowns were lifted.

The U.S. Dollar Index, which measures the strength of the U.S. dollar against a broad basket of currencies, has managed to get above the 97 level and tries to continue its rebound.

Arguably, the U.S. dollar became oversold when the U.S. Dollar Index declined from 99 at the end of May to 96 in June, so the rebound attempt is not surprising.

At the same time, the Canadian dollar enjoys some support due to stronger oil which is boosted by improved demand outlook and continued production cuts.

Technical Analysis

USD/CAD did not manage to settle above the 20 EMA at 1.3620 and the recent resistance near 1.3630 and fell closer to 1.3500 but rebounded from this support level.

In case USD/CAD continues the upside move, it will have to settle above the 20 EMA in order to gain more momentum. In this scenario, USD/CAD will head towards the minor resistance level at 1.3690.

A move above this level will open the way to the major resistance at 1.3730. The 50 EMA is located at 1.3760 and continues to decline, so it may soon find itself very close to 1.3730, creating a very significant resistance level for USD/CAD.

On the support side, the nearest support for USD/CAD is located at 1.3500. A move below this level will likely lead to increased downside momentum. In this case, USD/CAD will head towards the next support at 1.3440.

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

This article was originally posted on FX Empire