The Canadian dollar took a strong upward momentum
The USD / CAD has taken a strong bearish momentum and is attempting to move below 1.2720 as the US dollar loses ground against a large basket of currencies and oil tests new highs.
The US dollar index has failed to move above the resistance at 91 and is currently in the range between 90.80 and 91. If the US dollar index drops below 90.80, it will gain bearish momentum and will put additional pressure on the USD / CAD.
Oil recently managed to break above the $ 47 level and provided material support to many commodity-related currencies in the forex market.
Today, the United States reported that initial jobless claims soared to 853,000 when analysts expected them to total just 725,000. The Continuing Unemployment Claims report was also Disappointing, as continued jobless claims fell from 5.53 million to 5.76 million compared to analysts’ consensus of 5.34 million.
Meanwhile, there are no signs of price pressure in the United States, with the inflation rate rising 1.1% year over year in November, while the rate of core inflation rose 1.6%.
Traders will continue to monitor the latest news regarding the US stimulus negotiations. US Treasury Secretary Steven Mnuchin recently said negotiations have made a lot of progress and talks will continue. Further stimulus could put some pressure on the US currency, although it may have already been taken into account by the market.
USD to CAD is currently trying to stabilize below the nearest support level at 1.2720. If this attempt is successful, the USD in CAD will move to the next support at 1.2700.
In the event that the USD to CAD drops below the support at 1.2700, it will head to the next support level at 1.2675.
I note that RSI is in oversold territory so the downside risks are high. A few trading sessions ago the USD to CAD started to rebound when the RSI was in the same zone.
On the upside, the previous support level at 1.2750 will likely serve as the first level of resistance for USD to CAD. In the event that the USD to CAD moves above this level, it will test for the next resistance at 1.2775.
For an overview of all of today’s economic events, check out our economic calendar.