USD/CAD Daily Forecast – Test Of Support At 1.2320

Canadian Dollar Stays Strong Against U.S. Dollar

USD/CAD is currently trying to settle below the support level at 1.2320 while the U.S. dollar is under pressure against a broad basket of currencies.

The U.S. Dollar Index settled below the support at 93.75 and is moving towards the next support level which is located near the 50 EMA at 93.40. In case the U.S. Dollar Index gets to the test of this support level, USD/CAD will find itself under more pressure.

Today, foreign exchange market traders had a chance to take a look at inflation data from Canada. Inflation Rate increased by 0.2% month-over-month in September compared to analyst consensus of 0.1%. On a year-over-year basis, Inflation Rate grew by 4.4% while analysts expected that it would grow by 4.3%. Core Inflation Rate increased by 3.7%.

Higher-than-expected inflation provided additional support to Canadian dollar. Meanwhile, WTI oil gained some upside momentum after EIA Weekly Petroleum Status Report indicated that crude inventories declined by 0.4 million barrels. Oil’s move served as an additional positive catalyst for commodity-related currencies, including Canadian dollar.

Technical Analysis

USD to CAD managed to settle below the support level at 1.2340 and is trying to settle below the next support at 1.2320. In case USD to CAD declines below this level, it will head towards the next support at 1.2300.

A successful test of the support at 1.2300 will push USD to CAD towards the next support at 1.2270. If USD to CAD gets below 1.2270, it will move towards the next support at 1.2250.

On the upside, the previous support level at 1.2340 will serve as the first resistance level for USD to CAD. A successful test of this level will open the way to the test of the resistance at 1.2380.

In case USD to CAD climbs above this level, it will move towards the resistance at 1.2400. A move above 1.2400 will push USD to CAD towards the resistance at 1.2425.

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