U.S. Dollar Fails To Develop More Upside Momentum
USD/CAD made another attempt to settle below the nearest support level at 1.3135 as the U.S. dollar remained flat against a broad basket of currencies while WTI oil tried to get above the resistance at $43.50.
The U.S. Dollar Index tried to gain more upside momentum but faced resistance at the 20 EMA at 93.40 and declined closer to the 93 level. The 20 EMA remains a major obstacle on the way up, and a move above this level will likely bring significant upside momentum. This scenario will be bullish for USD/CAD.
U.S. has recently provided Durable Goods Orders data for July which surprised to the upside. On a month-over-month basis, Durable Goods Orders increased by 11.2% compared to analyst consensus of 4.3%.
Encouraging Durable Goods Orders report failed to provide material support to the American currency as traders remained focused on the upcoming commentary from Fed Chair Jerome Powell who is scheduled to speak at Jackson Hole Symposium on Thursday.
Powell’s commentary may have a very big impact on the currency markets. The key question is whether the Fed is ready to adopt an inflation target above 2% in order to provide additional support to the economy. If the Fed signals that it is ready to let inflation run, the U.S. dollar will find itself under pressure.
Technical Analysis
USD to CAD continues to trade in the range between the support at 1.3135 and the resistance at 1.3235. Both the high end and the low end of this range have been tested multiple times and proved their strength.
In case USD to CAD manages to settle below the support at 1.3135, it will gain more downside momentum and head towards the next material support level at 1.3080.
On the upside, a move above the resistance at 1.3235 will open the way to the next significant resistance level at 1.3330. The 20 EMA has already declined to 1.3250 so it will likely be close to 1.3235 by the time USD to CAD manages to get to the test of this level.
A move above the 20 EMA will signal a change of the trend for USD to CAD so I’d expect a lot of interest at this level.
Reprinted from Fxempire，the copyright all reserved by the original author.
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