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USD/CAD Daily Forecast – Support At 1.3500 Stays Strong

Vladimir Zernov

USD/CAD Video 17.06.20.

U.S. Dollar Continues Its Attempts To Resume The Upside Move

USD/CAD continues to trade below the 20 EMA at 1.3610 despite the U.S. dollar strength against a broad basket of currencies. The U.S. Dollar Index  has firmly settled above the 97 level as the American currency continues its rebound.

Today, the U.S. reported that Building Permits increased by 14.4% in May while Housing Starts were up by 4.3%. These reports represent another sign that the U.S. economy is starting to recover from the acute phase of the coronavirus crisis but I’d note that both Building Permits and Housing Starts are well below their pre-crisis levels.

Meanwhile, Canada has provided inflation data for May. Inflation Rate was 0.3% month-over-month compared to analyst consensus of 0.7%. On a year-over-year basis, Inflation Rate was -0.4% compared to analyst consensus of 0%.

Core Inflation Rate was 0.7% year-over-year, much softer than the analyst consensus of 1.4%. Canada’s inflation data suggests continued softness on the demand side.

Technical Analysis

USD/CAD continues to trade between the nearest support level at 1.3500 and the 20 EMA at 1.3610. At this point, USD/CAD does not have the momentum to continue the upside move. At the same time, the support at 1.3500 appears to be strong, and USD/CAD will likely need additional catalysts to get below this level.

In case USD/CAD moves above the 20 EMA at 1.3610 and the resistance near 1.3630, it will head towards the major resistance level at 1.3730. USD/CAD may also face some resistance near the high of the recent upside move at 1.3690, but I don’t think that this level will serve as a major obstacle for USD/CAD on its way to 1.3730 if it gets the necessary momentum.

On the support side, a move below the support level at 1.3500 will open the way to the test of the following support level at 1.3440. In addition, such a move will signal that USD/CAD is back to the downside mode.

In this scenario, USD/CAD may get additional downside momentum and head to the test of the next support at the lows of the previous downside move at 1.3360.

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

This article was originally posted on FX Empire