USD/CAD Approaches Key Resistance, Dollar Gains Momentum

Key Highlights

  • USD/CAD recovered nicely above the 1.2450 and 1.2500 resistance levels.
  • A crucial bearish trend line is forming with resistance near 1.2600 on the 4-hours chart.
  • EUR/USD and GBP/USD remain in a bearish zone below 1.1950 and 1.3900 respectively.
  • The US Manufacturing PMI is likely to remain strong near 59.4 in March 2021 (Preliminary).

USD/CAD Technical Analysis

After trading as low as 1.2365, the US Dollar started a strong increase against the Canadian Dollar. USD/CAD jumped above the 1.2450 resistance to start a steady increase.

Looking at the 4-hours chart, the pair gained pace above the 1.2500 and 1.2520 resistance levels. There was also a break above the 50% Fib retracement level of the key downward move from the 1.2737 high to 1.2365 low.

The pair even spiked above 1.2560 and the 100 simple moving average (red, 4-hours). However, the pair is facing a strong resistance near 1.2600.

There is also a crucial bearish trend line forming with resistance near 1.2600 on the same chart. The next major resistance is near the 1.2620 level and the 200 simple moving average (green, 4-hours).

If there is an upside break above 1.2600 and 1.2620, the pair could rise towards the 1.2700 level. Conversely, there is a risk of a fresh decline below the 1.2520 and 1.2500 support levels in the near term.

Looking at EUR/USD, the pair is still trading well below 1.1950 and 1.2000. Moreover, GBP/USD broke the 1.3800 support and it remains at a risk of more losses.

Economic Releases

  • UK Consumer Price Index for Feb 2021 (YoY) – Forecast +0.8%, versus +0.7% previous.
  • UK Core Consumer Price Index for Feb 2021 (YoY) – Forecast +1.4%, versus +1.4% previous.
  • Germany’s Manufacturing PMI for March 2021 (Preliminary) – Forecast 60.8, versus 60.7 previous.
  • Germany’s Services PMI for March 2021 (Preliminary) – Forecast 46.2, versus 45.7 previous.
  • Euro Zone Manufacturing PMI for March 2021 (Preliminary) – Forecast 57.7, versus 57.9 previous.
  • Euro Zone Services PMI for March 2021 (Preliminary) – Forecast 46.0, versus 45.7 previous.
  • US Manufacturing PMI for March 2021 (Preliminary) – Forecast 59.4, versus 59.5 previous.
  • US Services PMI for March 2021 (Preliminary) – Forecast 60.2, versus 59.8 previous.