USD/CAD Daily Forecast – Support At 1.3360 Stays Strong

The U.S. Dollar Index has settled below the 94 level and is trying to get below 93.5. In recent days, the U.S. dollar has not enjoyed its previous safe haven status and various bad news, like the surge in the number of new coronavirus cases or worsening relations with China, have hurt the American currency.

The downside move of the U.S. Dollar Index was fast and RSI has reached the extremely oversold territory, suggesting that a rebound may happen soon. However, the pressure is very significant so the U.S. dollar will need material upside catalysts to break the current downside trend.

While the continued weakness of the U.S. dollar is bearish for USD/CAD, the gains of the Canadian dollar are limited by the oil price weakness.

Apparently, oil traders are worried that oil demand will not rebound as fast as expected due to continued problems on the coronavirus front so WTI oil stays below the $41 level despite the weakness of the U.S. dollar which is bullish for commodities.

Technical Analysis

USD to CAD made another attempt to settle below the nearest support at 1.3360 but this support level remained strong. RSI is at moderate levels so USD to CAD has more room to develop downside momentum in case of additional weakness of the U.S. dollar.

In this scenario, USD to CAD will head towards the next support level at 1.3315, which is the low of the previous downside move.

On the upside, the nearest resistance level is located at 1.3440. This resistance has recently been tested and proved its strength so USD to CAD will need some additional support to get above this level.

In case USD to CAD is able to settle above 1.3440, it will head towards the major resistance level at 1.3500. The 20 EMA has declined towards this level which will make it stronger. A move above the 20 EMA will signal a return of the upside momentum.

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