USD/CAD Returns To 1.2800 After An Unsuccessful Attempt To Settle Above 1.2850

Key Insights

  • U.S. dollar remains under some pressure against a broad basket of currencies.

  • WTI oil tested the $95 level, which was bearish for the Canadian currency.

  • A move below the support at 1.2800 will push USD to CAD towards the next support level at 1.2780.

U.S. Dollar Is Losing Some Ground Against Canadian Dollar

USD/CAD is currently trying to settle back below the support at 1.2800, while the U.S. dollar is losing ground against a broad basket of currencies.

The U.S. Dollar Index has recently made several attempts to settle below the support at 98.70 but failed to develop sufficient downside momentum and remained in the 98.70 – 99 range. In case the U.S. Dollar Index declines below 98.70, it will head towards the support at 98.35, which will be bearish for USD/CAD.

Today, the U.S. reported that Producer Prices increased by 0.8% month-over-month in February, compared to analyst consensus which called for growth of 0.9%. On a year-over-year basis, Producer Prices grew by 10%, in line with the analyst consensus.

Foreign exchange market traders also focused on the developments in commodity markets. WTI oil settled below the psychologically important $100 level and tested the 50 EMA at $94.60. In case WTI oil declines below the 50 EMA, it will gain additional downside momentum, which will be bearish for commodity-related currencies, including Canadian dollar.

Technical Analysis

USD to CAD failed to settle above the resistance at 1.2850 and is testing the support level at 1.2800. If USD to CAD settles below this level, it will move towards the next support at 1.2780.

A successful test of the support at 1.2780 will open the way to the test of the next support at the 20 EMA at 1.2760. In case USD to CAD settles below the 20 EMA, it will head towards the 50 EMA at 1.2730.

On the upside, USD to CAD needs to stay above the 1.2800 level to have a chance to develop upside momentum in the near term. The next resistance level for USD to CAD is located at 1.2830.

In case USD to CAD climbs above the resistance at 1.2830, it will head towards the resistance level at 1.2850. A move above this level will push USD to CAD towards the resistance at 1.2890.

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This article was originally posted on FX Empire