- Canadian dollar gained strong momentum against U.S. dollar.
- Strong economic reports from the U.S. failed to provide enough support to the American currency.
- A move below the support at 1.2525 will push USD/CAD towards the support at 1.2500.
U.S. Dollar Continues To Lose Ground Against Canadian Dollar
USD/CAD is currently testing the support level at 1.2525, while the U.S. dollar is gaining some ground against a broad basket of currencies.
The U.S. Dollar Index has recently made an attempt to get above the 99 level but lost momentum and pulled back towards the nearest support at 98.70. If the U.S. Dollar Index settles back below this support level, it will head towards the next support at 98.35, which will be bearish for USD/CAD.
Today, foreign exchange market traders focused on the economic data from the U.S. Initial Jobless Claims report indicated that 187,000 Americans filed for unemployment benefits in a week, compared to analyst consensus of 212,000. The report highlighted the current strength of the job market.
Durable Goods declined by 2.2% month-over-month in February, while analysts expected that they would decrease by just 0.5%. Manufacturing PMI grew from 57.3 in February to 58.5 in March, compared to analyst consensus of 56.3. Services PMI increased from 56.5 to 58.9, while analysts expected that it would decrease to 56.
The strong PMI reports show that the economy is growing fast despite inflationary pressure. In this environment, the Fed could raise rates aggressively. Interestingly, these reports failed to provide additional support to the American currency.
USD to CAD is testing the support level at 1.2525. In case USD to CAD manages to settle below this level, it will move towards the next support level at 1.2500.
A successful test of the support at 1.2500 will push USD to CAD towards the next support at 1.2470. If USD to CAD declines below this level, it will head towards the next support at 1.2450.
On the upside, the previous support level at 1.2550 will serve as the first resistance level for USD to CAD. If USD to CAD climbs above this level, it will move towards the resistance at 1.2590. A successful test of this level will push USD to CAD towards the resistance at 1.2625.
For a look at all of today’s economic events, check out our economic calendar.
Read More: USD/CAD Slides Below The Support At 1.2525