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The Canadian dollar is making progress  against the US dollar, mostly riding on the weakness of the USD across the board.

USD/CAD is trading below 1.09 and getting close to the important support line of 1.0850.

Here is how it looks on the daily chart. 1.0850 is clear support for the pair:

Canadian dollar May 6 2014 loonie gains on the fall of the US dollar technical daily forex chart

1.0850 was not only the low in April, but also served as strong resistance several times in the past. Below, 1.0780 works as further support.

On the topside, 1.0950 is weak resistance, and it is followed by the all important level of 1.10 which USDCAD “hugged” for some time.

Reasons for USD/CAD fall

The  big sell in the dollar is seen all over, with GBP/USD getting very close to 1.70, EUR/USD annoying the ECB with a move closer to 1.40 and NZD/USD at fresh multi-year highs.

In Canada, data is mixed. Canada posted a trade balance surprise of only $0.08 billion, below expectations of 0.13 billion, yet not too far from this figure. However,  both exports and imports came out above expectations, meaning that trade is more active. This is generally positive.

The Ivey Purchasing Managers’ Index came out slightly above expectations, at 54.1 points instead of 54 expected on a seasonally adjusted basis.

The big event for the loonie is the release of employment figures on Friday. This time, the Canadian jobs data gets its own stage, as the US NFP was already published.

For more technical levels, events and analysis, see the USDCAD forecast.