USD / CAD Daily Forecast – US Dollar Declines After Low GDP Growth Rate Report
The US dollar loses ground against the Canadian dollar
The USD / CAD continues its attempts to settle below the support level at 1.2340 as the US dollar loses ground against a large basket of currencies.
The US dollar index took a strong bearish momentum and managed to break below the 50 EMA which sits near 93.45. The next level of support for the US dollar index is at 93.10. In the event that the US dollar index passes the test of this support level, the USD / CAD will come under more pressure.
Today, the United States announced that GDP grew 2% quarter-over-quarter in the third quarter of 2021, while analysts expected growth of 2.7%. This report puts pressure on the US currency, as weaker GDP growth could force the Fed to be more accommodating at its next meeting on November 2-3, 2021.
Forex traders also looked at the Initial Jobless Claims report, which showed 281,000 Americans claimed unemployment benefits in one week, compared to an analyst consensus of 290,000. Continuing unemployment claims fell by 2 48 million to 2.24 million while analysts expected them to drop to 2.42 million. Pending home sales fell 2.3% month-over-month in September, while analysts believed they would remain unchanged from August levels.
It should be noted that the losses of the US dollar against the Canadian dollar were limited as WTI oil fell below the $ 82 level which was bearish for commodity currencies.
The USD against CAD failed to settle above the resistance at 1.2380 and moved back towards the support level at 1.2340. If the USD to CAD drops below this level, it will move to the support at 1.2320.
A successful test of the support at 1.2320 will pave the way for testing the next support at 1.2300. If the USD against the CAD manages to stabilize below 1.2300, it will head towards the support at 1.2270.
On the upside, the USD against the CAD needs to break above 1.2380 to have a chance to rebound in the short term. The next level of resistance from USD to CAD is at 1.2400. If the USD in CAD breaks this level, it will move towards the 20 EMA at 1.2425.
For an overview of all of today’s economic events, check out our economic calendar.