USD/CAD Daily Forecast – Test Of Support At 1.2130

·2 min read

USD/CAD Video 07.05.21.

Canadian Dollar Continues To Gain Ground Against U.S. Dollar

USD/CAD is currently trying to settle below the support at 1.2130 while the U.S. dollar is losing ground against a broad basket of currencies.

The U.S. Dollar Index managed to settle below the support at 90.50 and is trying to settle below the next support at 90.30. If the U.S. Dollar Index manages to settle below this level, it will head towards the psychologically important 90 level which will be bearish for USD/CAD.

Today, the U.S. released Non Farm Payrolls report which indicated that the economy added 266,000 jobs in April compared to analyst consensus of 978,000. The report was much worse than expected, and it put significant pressure on the American currency. It looks that generous unemployment benefits have decreased workers’ desire to get jobs in lower-paid professions. Unemployment Rate increased from 6% in March to 6.1% in April.

Canada has also provided employment data today, although it had less impact on the foreign exchange market compared to U.S. reports. Employment Change report indicated that Canadian economy lost 207,100 jobs in April compared to analyst consensus which called for a loss of 175,000 jobs. Unemployment Rate increased from 7.5% in March to 8.1% in April compared to analyst consensus of 7.8%.

Technical Analysis

USD to CAD managed to settle below the support at 1.2170 and is testing the next support level at 1.2130. It should be noted that RSI is in the oversold territory, and the risks of a rebound are increasing.

In case USD to CAD manages to settle below 1.2130, it will move towards the support at 1.2100. A move below this level will open the way to the test of the support at 1.2065. I’d also note that USD to CAD has not visited this territory since 2017 so it remains to be seen whether previous levels will be relevant for today’s trading.

On the upside, a move above 1.2170 will push USD to CAD towards the resistance at 1.2200. In case USD to CAD settles above this level, it will head towards the next resistance at 1.2250.

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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