USD/CAD Daily Forecast – U.S. Dollar Pulls Back After Major Upside Move

USD/CAD Video 09.09.20.

Canadian Dollar Rebounds After Yesterday’s Significant Sell-Off

USD/CAD pulled back after yesterday’s upside move as the U.S. dollar lost ground against a broad basket of currencies while WTI oil managed to get back above the $37 level.

U.S. Dollar Index made an attempt to settle above the resistance at 93.50 but did not manage to gain more momentum and declined towards 93.20. The nearest support for U.S. Dollar Index is located at the 20 EMA at 93.05, and a move below this support level will signal that the American currency is losing its upside momentum.

In this case, the U.S. Dollar Index will head towards the next support level at 92.50 which would be bearish for USD/CAD.

Today, Bank of Canada announced its Interest Rate Decision. As expected, the interest rate remained intact at 0.25%. Speaking about the trajectory of the economic recovery, the Bank of Canada noted that the pace of the recovery remained dependent on the path of the coronavirus pandemic.

The Canadian economy needs significant support, and Bank of Canada continues its quantitative easing program. The central bank also promised to keep rates low until inflation is stable at the 2% target.

It remains to be seen whether the world central banks will be able to achieve their 2% inflation targets in the foreseable future, but markets should prepare for years of low interest rates at all developed economies.

Technical Analysis

usd cad september 9 2020

USD to CAD failed to settle above the resistance level at 1.3235 and returned back under 1.3200.

The nearest support for USD to CAD is located at the 20 EMA at 1.3150. In case USD to CAD manages to settle below this level, it will head towards the next support at 1.3135.

A move below the support at 1.3135 will open the way to the test of the support level at 1.3050. No significant levels were formed between 1.3050 and 1.3135 so this move may be fast.

On the upside, USD to CAD needs to settle above the resistance at 1.3235 to have a chance to continue the upside move. If this happens, USD to CAD will head towards the next resistance level at the 50 EMA at 1.3270.

For a look at all of today’s economic events, check out our economic calendar.