US Markets

USD/CAD Daily Forecast – Strong Oil Provided Support To Canadian Dollar

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USD/CAD Video 22.10.20.

Canadian Dollar Is Mostly Flat Against U.S. Dollar

USD/CAD continues to trade near the support level at 1.3135 while the U.S. dollar is gaining ground against a broad basket of currencies as strong oil provided support to Canadian dollar.

The U.S. Dollar Index continues its attempts to settle above the nearest resistance level at 92.80. If the U.S. Dollar Index manages to gain momentum above this level, it will get to the test of the next resistance at 93.00 which will be bullish for USD/CAD.

Today, the U.S. reported that Initial Jobless Claims declined to 787,000 while Continuing Jobless Claims decreased to 8.37 million. Both reports were better than analyst expectations.

U.S. Existing Home Sales increased by 9.4% month-over-month in September compared to analyst consensus which called for growth of 5%. The housing market clearly remains very strong.

Meanwhile, oil managed to rebound from the $40 level and provided support to Canadian dollar.

USD/CAD traders will continue to monitor the ongoing U.S. coronavirus aid package negotiations. U.S. House Speaker Nancy Pelosi has recently stated that the talks were on a good path but it remains to be seen whether Democrats and Republicans will be able to reach consensus before November elections.

Judging by the stock market action, traders are not ready to make any serious bets on the outcome of the current negotiations as S&P 500 has been stuck near its 20 EMA in recent trading sessions.

Technical Analysis

USD to CAD made an attempt to get to the test of the resistance at 1.3200 but lost upside momentum and fell back towards the support 1.3135. The nearest support level for USD to CAD is located near the recent lows at 1.3100.

In case USD to CAD manages to settle below this level, it will head towards the support at 1.3050. This move may be fast as there are no significant levels between 1.3050 and 1.3100.

If USD to CAD settles below 1.3050, it will continue its downside move and get to the test of September lows at 1.3000.

On the upside, USD to CAD needs to stay above 1.3135 to have a chance to develop additional momentum and get to the test of resistance at 1.3200. The 20 EMA is in the nearby, and this resistance level is set to be a strong obstacle on the way up.

If the test of the resistance at 1.3200 is successful, USD to CAD will head towards the next resistance level at the 50 EMA at 1.3230.

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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