USD/CAD Video 30.06.20.
Canadian Dollar Gains Ground As Demand For Riskier Currencies Increases
USD/CAD found itself under pressure as the U.S. dollar lost ground against a borad basket of currencies after better-than-expected CB Consumer Confidence report.
At this point, it looks like U.S. coronavirus aid measures are working and consumers’ mood is improving. Consumer confidence is very important for the economic rebound so the market reaction is not surprising.
Following the report, demand for safe haven assets like the U.S. dollar decreased, and the U.S. Dollar Index declined below the key resistance at 97.5.
Earlier, the U.S. Dollar Index made a serious attempt to settle above this resistance level and even reached 97.8 but failed to get additional upside momentum and returned back into the trading range between 97 and 97.5. This move was bearish for USD/CAD which suffered a material sell-off.
Canada has just reported GDP numbers for April. Not surpisingly, GDP declined by 11.6% on a month-over-month basis. However, the report was better than the analyst consensus which called for a decline of 13% and provided additional support to the Canadian dollar.
USD/CAD traders should also watch oil closely since it is near the key $40 level. A move above this level will provide additional support to commodity-related currencies like the Canadian dollar and put more pressure on USD/CAD.
USD/CAD is testing the support level at the 20 EMA at 1.3620 after an unsuccessful attempt to settle above the resistance at the 50 EMA at 1.3710. In case USD/CAD manages to stay above the 20 EMA, it could stay in the range between the 20 EMA and the 50 EMA for some time.
A move below the 20 EMA will open the way to the test of the next support level at 1.3500. In addition, such a move will signal that the upside momentum in USD/CAD is under question.
On the upside, USD/CAD will need to get above the resistance at the 50 EMA to continue the upside move. If the test of the 50 EMA level is successful, USD/CAD will get additional upside momentum and head towards the next resistance level at 1.3800.
For a look at all of today’s economic events, check out our economic calendar.