USD/CAD Daily Forecast – Canadian Dollar Gains Ground Amid Risk-On Mode In The Markets
USD/CAD Video 08.04.20.
Stronger Oil And Optimistic Equity Markets Boost Canadian Dollar
USD/CAD continues to stay below the 20 EMA level as optimism in the global markets support riskier assets like the Canadian dollar.
Earlier, the U.S. dollar tried to rebound, and the U.S. Dollar Index is still above the 100 level. However, the comments of Dr. Anthony Fauci, who is the director of the U.S. National Institute of Allergy and Infectious Diseases and a key speaker during the current coronavirus crisis, helped riskier assets.
According to Dr. Fauci, the U.S. health officials are already developing plans on how the country will return to normal life in case the virus containment measures prove to be effective.
No exact steps are expected at this time, and current social distancing measures will be continued, but the U.S. needs a plan on how to re-open the economy since each day spent in a lockdown puts pressure on the economy.
Another catalyst playing in favor of the Canadian dollar today is the strength on the oil price front. Oil is gaining ground ahead of the OPEC+ meeting despite the increase in oil inventories.
Oil production is an important part of the Canadian economy so oil price strength often translates into the Canadian dollar strength.
While speculative traders could make some bets on oil ahead of the meeting and cause volatility in USD/CAD, the real action will take place tomorrow when the results of the OPEC+ meeting will be made public.
Technical Analysis
USD/CAD has breached the 20 EMA level and continues its downside move. The next support for the pair is located near the recent lows at 1.3925. USD/CAD has already made an attempt to test this level but received material buyer support near 1.3950.
If the support at 1.3925 is breached to the downside, the next support level for the pair is located at the 50 EMA at 1.3850. This move would be possible if oil prices rally in case of a good oil production cut deal.
On the upside, the nearest resistance is at 20 EMA at 1.4085. In case this level is breached to the upside, the pair could head towards the next material resistance near the 1.4250 level.
This article was originally posted on FX Empire
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