USD/CAD Daily Forecast – Support At 1.3135 In Sight
USD/CAD Video 19.08.20.
Canadian Dollar Stays Strong Despite U.S. Dollar’s Attempts To Rebound
U.S. Dollar Index is currently trying to settle above 92.50. This is a very interesting development since the U.S. Dollar Index has recently breached the support at 92.50 and declined towards 92.10.
In case the U.S. Dollar Index manages to settle above 92.50, market participants will decide that the previous downside move was a fake breakout and increase their long bets on U.S. dollar which would be bullish for USD/CAD.
Canada has recently provided its inflation numbers for July. Inflation Rate was -0.1% month-over-month compared to analyst consensus of 0.4%. On a year-over-year basis, Inflation Rate was 0.1% compared to analyst consensus of 0.5%. Core Inflation Rate was 0.7% year-over-year.
Weak inflation numbers show that demand remains under pressure and leaves room for additional stimulus. In fact, a recent Reuters report has indicated that Canadian Prime Minister Justin Trudeau was preparing a major recovery plan which would demand heavy spending.
In addition to inflation data, Canada has also provided Wholesale Sales numbers for July. This report was more optimistic as Wholesale Sales increased by 18.5% month-over-month compared to analyst consensus which called for growth of 10%.
USD to CAD found support at 1.3135 and did not manage to go lower. Currently, USD to CAD is trying to rebound but the strength of this rebound is limited.
In case USD to CAD is able to settle below the nearest support level at 1.3135, it will gain more downside momentum and head towards 1.3100.
On the upside, the nearest resistance for USD to CAD is located at 1.3200. A move above this resistance level will allow USD to CAD to get to the test of the next resistance level at 1.3235.
At this point, a lot will depend on whether the U.S. Dollar Index manages to settle above 92.50. If this happens, USD to CAD will have significant chances for a rebound.
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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