USD/CAD Daily Forecast – Another Attempt To Get Above 1.3200

Canadian Dollar Failed To Gain More Upside Momentum Despite Strong Oil

USD/CAD continues to trade below 1.3200 as the U.S. dollar is gaining ground against a broad basket of currencies while oil is moving higher due to production shutdowns in the U.S. Gulf of Mexico.

The U.S. Dollar Index was under pressure at the beginning of the day and tested support at 92.80. However, it reversed course after the release of U.S. Industrial Production and Manufacturing Production reports and is currently trying to settle above the 20 EMA at 93.10.

U.S. Industrial Production increased by 0.4% month-over-month compared to analyst consensus which called for growth of 1%. Manufacturing Production grew by 1% compared to analyst consensus of 1.2%.

In case the U.S. Dollar Index manages to settle above the 20 EMA, it will have good chances to develop additional upside momentum which will be bullish for USD/CAD.

I’d note that trading action may be volatile ahead of Fed Interest Rate Decision which will be announced on Wednesday. Traders await additional commentary on Fed’s monetary policy after the central bank adopted an average inflation target of 2%.

If the Fed’s message is dovish enough, the U.S. dollar may find itself under increased pressure. However, it remains to be seen whether Fed can come up with additional stimulus in the near term.

Technical Analysis

USD to CAD tested the support at 1.3135 but failed to gain more downside momentum and rebounded back above the 20 EMA at 1.3165.

In recent trading sessions, USD to CAD faced material resistance at 1.3200. In case USD to CAD manages to settle above this level, it will gain more upside momentum and head towards the next resistance at 1.3235.

If USD to CAD moves above the resistance at 1.3235, it will get to the test of the 50 EMA at 1.3255.

On the support side, the 20 EMA continues to serve as the nearest support level but the main support is located at 1.3135.

If USD to CAD manages to settle below the support at 1.3135, it will gain significant downside momentum and head towards the next support at 1.3050. #USD/CAD##FX#

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