Canadian Dollar Rallies As Commodity Markets Move Higher
USD/CAD is currently trying to settle below the support level at 1.2450 while the U.S. dollar is under significant pressure against a broad basket of currencies.
The U.S. Dollar Index has recently managed to get below the 92 level and is currently testing the support at the 50 EMA at 91.90. If this test is successful, the U.S. Dollar Index will move towards the next support level at 91.80 which will be bearish for USD/CAD.
Today, foreign exchange market traders had a chance to take a look at the latest job market data from U.S. Initial Jobless Claims declined from 424,000 (revised from 419,000) to 400,000 compared to analyst consensus of 380,000. Continuing Jobless Claims increased from 3.26 million (revised from 3.24 million) to 3.27 million compared to analyst consensus of 3.2 million.
Second-quarter GDP Growth Rate report showed that GDP grew by 6.5% quarter-over-quarter compared to analyst consensus of 8.5%. Pending Home Sales decreased by 1.9% month-over-month in June while analysts expected that they would grow by 0.3%.
All economic reports from U.S. missed analyst estimates which put additional pressure on the American currency. Meanwhile, Canadian dollar moved higher as commodity markets rebounded.
USD to CAD managed to settle below the support at 1.2480 and is testing the next support level at $1.2450. If USD to CAD settles below this level, it will move to another test of the next support level which is located at the 50 EMA at 1.2435.
A move below the 50 EMA at 1.2435 will push USD to CAD towards the support at 1.2420. If USD to CAD declines below 1.2420, it will move towards the support level at 1.2385. A successful test of this level will open the way to the test of the support at 1.2350.
On the upside, the previous support level at 1.2480 will serve as the first resistance level for USD to CAD. In case USD to CAD manages to get back above this level, it will move towards the resistance at 1.2500. A move above this level will push USD to CAD towards the resistance at 1.2520.
For a look at all of today’s economic events, check out our economic calendar.