USD/CAD drops below 1.2050 as USD struggles to find demand

USD/CAD turns south after rising toward 1.2100 earlier in the day.
US Dollar Index stays in the negative territory on Friday.
Focus shifts to US Markit Manufacturing and Services PMI data.

Eren Sengezer FXStreet

After closing in the negative territory on Thursday, the USD/CAD pair staged a rebound but lost its traction before reaching 1.2100. As of writing, the pair was losing 0.12% on the day at 1.2043.

DXY remains depressed below 90.00

The unabated USD weakness is forcing USD/CAD to push lower on Friday. The US Dollar Index (DXY) is currently posting small losses at 89.74 as the upbeat market mood makes it difficult for the greenback to find demand. Later in the day, the IHS Markit will release the preliminary Manufacturing and Services PMI data for May.

Meanwhile, the S&P 500 Futures and the Nasdaq Futures are rising 0.3% and 0.2%, respectively, suggesting that risk flows are likely to continue to dominate the financial markets in the second half of the day.

On the other hand, the barrel of West Texas Intermediate is rising 1.7% on the day at $62.85, helping the commodity-sensitive loonie preserve its strength. Later in the session, Baker Hughes Energy Services' weekly US Oli Rig Count data will be looked upon for fresh impetus.

There won't be data releases featured in the Canadian economic docket on Friday and the USD's market valuation is likely to continue to drive USD/CAD movements.

Technical levels to watch for

USD/CAD

Overview
Today last price	1.2046
Today Daily Change	-0.0014
Today Daily Change %	-0.12
Today daily open	1.206

Trends
Daily SMA20	1.2211
Daily SMA50	1.2408
Daily SMA100	1.2552
Daily SMA200	1.2819

Levels
Previous Daily High	1.2144
Previous Daily Low	1.2049
Previous Weekly High	1.2203
Previous Weekly Low	1.2046
Previous Monthly High	1.2654
Previous Monthly Low	1.2266
Daily Fibonacci 38.2%	1.2086
Daily Fibonacci 61.8%	1.2108
Daily Pivot Point S1	1.2025
Daily Pivot Point S2	1.199
Daily Pivot Point S3	1.193
Daily Pivot Point R1	1.212
Daily Pivot Point R2	1.218
Daily Pivot Point R3	1.2215

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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