U.S. Dollar Tries To Develop Upside Momentum
USD/CAD returned back above 1.3400 as WTI oil dipped below the $40 level and put pressure on commodity-related currencies.
The U.S. dollar is mostly flat against a broad basket of currencies, and the U.S. Dollar Index has settled below 93.5 in a rather volatile trading session.
The recent U.S. Initial Jobless Claims report indicated that 1.43 million Americans filed for unemployment benefits in a week, mostly in line with the analyst consensus of 1.45 million.
The Continuing Jobless Claims report brought a negative surprise as it showed that Continuing Jobless Claims increased from 16.2 million to 17 million.
This increase indicates that the U.S. job market has likely taken another blow from the continued spread of the virus.
Second-quarter U.S. GDP report was horrific as GDP declined by 32.9%. However, the market was ready to hear the bad news since analysts expected a decline of 34.1%.
It remains to be seen whether the recent employment data will be able to boost safe haven buying in U.S. dollar since search for protective assets has recently shifted into the precious metals.
In addition, U.S. Treasury yields continue to decrease, making the American currency less attractive from an income point of view.
The U.S. President Donald Trump has recently added to uncertainty, raising the possibility of delaying the Presidential election due to mail-in voting because of coronavirus.
Technical Analysis
USD to CAD has once again tested the resistance level at 1.3440. USD to CAD managed to get above this level but met additional resistance just below the 20 EMA level at 1.3470 and pulled back below 1.3440.
In case USD to CAD manages to settle above 1.3440, it will have good chances to get to the test of the major resistance level at 1.3500.
A move above 1.3500 will indicate that USD to CAD is ready for another attempt to establish an upside trend.
On the support side, USD to CAD has recently received support near 1.3330, just above the low of the previous downside move at 1.3315.
A move below this level will likely lead to increased downside momentum, taking USD to CAD closer to the next support level at 1.3270.
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