USD/CAD Video 21.09.20.
Strong Demand For Safe Haven Assets Provides Support To U.S. Dollar
USD/CAD managed to get above the 50 EMA at 1.3250 and is trying to settle above 1.3300 as the U.S. dollar is showing its best performance in many weeks against a broad basket of currencies.
The U.S. Dollar Index gained strong upside momentum amid fears about the second wave of lockdowns in Europe and is trying to get to the test of the 50 EMA at 93.85.
If this test is successful, the U.S. dollar will continue its upside move which will be bullish for USD/CAD.
Meanwhile, oil is losing ground amid fears about sustainability of oil demand recovery, putting additional pressure on commodity-related currencies like Canadian dollar.
The main question for USD/CAD traders right now is whether U.S. dollar will continue to benefit from increased demand for safe haven assets.
If the global market sell-off continues and the U.S. dollar regains its role of a safe haven currency of last resort, USD/CAD may gain significant upside momentum.
In this scenario, USD/CAD may quickly get back to the levels last seen in late June before the U.S. Dollar Index settled below the 97 level and started a strong downside trend.
USD to CAD is heading towards the nearest resistance level at 1.3330 as the U.S. dollar continues to gain ground against a broad basket of currencies.
Currently, USD to CAD managed to settle above the 50 EMA at 1.3250 which signals that USD to CAD will try to establish a significant upside trend.
In case USD to CAD moves above the resistance at 1.3330, it will head towards the next resistance level at 1.3400.
On the support side, the previous resistance at the 50 EMA at 1.3250 will likely serve as the first material support level for USD to CAD.
If USD to CAD gets below this level, it will gain downside momentum and head towards the next support level at 1.3200.
From a big picture point of view, USD to CAD managed to gain strong momentum after a period of consolidation, and it has good chances to develop additional momentum in case the right catalysts emerge.
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This article was originally posted on FX Empire