USD/CAD Daily Forecast – U.S. Dollar Continues To Rebound Against Canadian Dollar

USD/CAD Video 25.01.21.

U.S. Dollar Moves Higher Against Canadian Dollar At The Start Of The Week

USD/CAD has recently made an attempt to get above the resistance at 1.2775 while the U.S. dollar gained ground against a broad basket of currencies.

The U.S. Dollar Index managed to get above the resistance at the 20 EMA at 90.30 and is trying to settle above the next resistance level at 90.50. If this attempt is successful, the U.S. Dollar Index will head towards the next resistance level at 90.70 which will be bullish for USD/CAD.

Today, Canada reported that Manufacturing Sales increased by 0.6% month-over-month in December after falling by 0.6% in November. Tomorrow, Canada is expected to report that Building Permits declined by 5% month-over-month in December after growing by 12.9% in November, but it remains to be seen whether Canada’s housing data will have a notable impact on Canadian dollar’s dynamics on the foreign exchange market.

At this point, commodity market dynamics and Biden’s stimulus package proposal will likely remain the main drivers for USD/CAD.

Technical Analysis

USD to CAD managed to get above the resistance at 1.2750 and tested the resistance level at 1.2775 but failed to gain sufficient upside momentum. If USD to CAD manages to get above the resistance at 1.2775, it will move towards the next resistance level which is located at the 50 EMA at 1.2800.

In case USD to CAD settles above the resistance at the 50 EMA, it will gain additional upside momentum and head towards the resistance at 1.2835. RSI is in the moderate territory so there is plenty of room to gain momentum in case the right catalysts emerge. If USD to CAD gets above the resistance at 1.2835, it will move towards the resistance level at 1.2860.

On the support side, the previous resistance level at 1.2750 will likely serve as the first support level for USD to CAD. If USD to CAD manages to settle below this level, it will move towards the support at the 20 EMA at 1.2730. The next support level is located at 1.2720 so USD to CAD will likely receive significant support at the 1.2720 – 1.2730 area.

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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