USD/CAD Video 28.07.20.
U.S. Dollar Tries To Rebound Ahead Of Fed Meeting
USD/CAD rebounded closer to the previous support level at 1.3360 as the U.S. dollar attempted to rebound against a broad basket of currencies while WTI oil lost momentum and declined closer to the $41 level.
The U.S. Dollar Index has found support at 93.5 and made an attempt to gain more upside momentum above the 94 level. This attempt was not successful, and the U.S. Dollar Index settled in the range between 93.5 and 94.
Tomorrow, the U.S. Federal Reserve will announce its Interest Rate Decision and provide commentary which is expected to be dovish. This commentary will serve as a major catalyst for the American currency.
If the commentary is very dovish, the U.S. Dollar Index may breach the support at 93.5 and head lower, which will be bearish for USD/CAD.
Another topic in focus for currency traders is the new coronavirus aid package which is currently debated by Republicans and Democrats. Failure to negotiate a new deal before the end of July may put additional pressure on the American currency.
Meanwhile, the situation in the oil market remains worrisome for the Canadian dollar and other commodity-related currencies.
Oil continues to trade in a tight range not far from the $40 level, and recent attempts to gain more upside momentum were not successful.
In case WTI oil dives below the $40 level, the Canadian dollar will likely find itself under significant pressure.
USD to CAD has recently tried to settle below the nearest support at 1.3360 but failed to do this and returned above this support level. I’d note that the ease of movement of USD to CAD puts this support level under question.
In case USD to CAD gains more downside momentum, it will head towards the test of the support level at 1.3315 which is located at the low of the previous downside move.
On the upside, the nearest resistance level is located at 1.3440.
A move above this level will open the way to the test of the major resistance level at 1.3500, although USD to CAD may also face resistance just below this level at the 20 EMA.
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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