USD/CAD Approaching Key Supports Near 1.3400
- USD/CAD started a major decline from well above 1.4000.
- There was a break below a major bullish trend line at 1.3780 on the daily chart.
- The US ADP Employment is likely to decline 9,000K in May 2020, less than the last -20,236K.
- The BoC Interest Rate Decision will be announced today (Forecast – no change from 0.25%).
USD/CAD Technical Analysis
After forming a major top near the 1.4667 level in March 2020, the US Dollar started a significant decline against the Canadian Dollar. USD/CAD broke many supports near 1.4000 to move into a bearish zone.
Looking at the daily chart, the pair failed to stay above the 1.4000 and 1.3850 support levels. It broke the 50% Fib retracement level of the key upward move from the 1.2951 low (formed in Dec 2019) to 1.4667 high (formed in March 2020).
More importantly, there was a break below a major bullish trend line at 1.3780 on the same chart. The pair is now trading well below the 1.3700 level and the 100-day simple moving average (red).
On the downside, there are a few important supports near the 1.3400 level and the 200-day simple moving average (green). The 76.4% Fib retracement level of the key upward move from the 1.2951 low to 1.4667 high is also near 1.3355.
The 1.3350-1.3400 zone represents the previous breakout region. Therefore, 1.3350 might provide support. Any further losses could lead USD/CAD towards the 1.3000 support.
On the upside, the previous support near 1.3700 and the 100-day SMA might act as barriers. To move into a positive zone, the pair must climb above 1.3700 and settle nicely above 1.3800.
Looking at EUR/USD, the pair extended its rise above 1.1150. Similarly, GBP/USD gained pace above the 1.2500 resistance zone.
Upcoming Economic Releases
- Germany’s Unemployment Change for May 2020 - Forecast 200K, versus 373K previous.
- Germany’s Unemployment Rate for May 2020 – Forecast 6.2%, versus 5.8% previous.
- Germany’s Services PMI for May 2020 - Forecast 31.4, versus 31.4 previous.
- Euro Zone Services PMI for May 2020 – Forecast 28.7, versus 28.7 previous.
- UK Services PMI for May 2020 – Forecast 28.0, versus 27.8 previous.
- US Services PMI for May 2020 – Forecast 36.9, versus 36.9 previous.
- US ADP Employment Change May 2020 - Forecast -9000K, versus -20236K previous.
- US ISM Non-Manufacturing Index for May 2020 – Forecast 44.0, versus 41.8 previous
- BoC Interest Rate Decision – Forecast 0.25%, versus 0.25% previous.