USD/CAD holds gains near multi-day high above 1.3840

  • A combination of support factors push USD/CAD to a multi-day high on Friday.
  • Lower oil prices weigh on the loonie and offer support amid resurgent demand for dollars.

The pair USD/CAD it is supported by the overnight bounce from the 1.3650 area, or a two-week low, and gets strong follow-up traction on Friday. Intraday buying continues during the first half of the European session and lifts the pair to a four-day high around the 1.3840 area.

The further decline in oil prices undermines the commodity-linked loonie and turns out to be a key factor acting as a tailwind for the USD/CAD pair. Indeed, the black liquid remains within striking distance of the weekly low amid concerns that a deeper global economic downturn will hurt fuel demand.

Aside from this, a nice pickup in US dollar demand provides additional momentum to the USD/CAD pair and supports prospects for further gains. Philadelphia Fed President Patrick Harker’s overnight comments bet on a further rate hike in November and lift the dollar to a one-week high.

Harker warned that the US central bank is actively trying to rein in the economy to fight inflation and added fuel to the recent rally in US Treasury yields. US 10-year government bond rallies to its highest level since 2008, which, in turn, is seen as supportive for the dollar.

Investors also seem concerned that rapidly rising borrowing costs could end up triggering a recession in the world’s largest economy. In addition, the protracted war between Russia and Ukraine and China’s strict zero COVID policy weigh on global risk sentiment and further benefit the dollar’s relative safe-haven status.

There will be no major macro data releases in the US, leaving the dollar at the mercy of US bond yields and general risk sentiment.

Canadian retail sales rose 0.7% in August, beating the market consensus for a 0.2% reading. Excluding vehicles, the advance was also 0.7%, higher than the 0.4% expected. The data implies a rebound after falling 2.2% and 2.5% in July respectively.

Technical levels to watch

USD/CAD

Overview
last price today 1.3822
Today I change daily 0.0057
Today’s daily variation in % 0.41
Daily opening today 1.3765
Trends
daily SMA20 1.3722
daily SMA50 1.3344
daily SMA100 1.3111
daily SMA200 1.2905
levels
Previous daily high 1.3807
Previous Daily Low 1.3651
Previous Weekly High 1.3978
Previous Weekly Low 1.3703
Previous Monthly High 1.3838
Previous Monthly Low 1.2954
Daily Fibonacci of 38.2%. 1.3711
Daily Fibonacci of 61.8% 1.3747
Daily Pivot Point S1 1.3675
Daily Pivot Point S2 1.3585
Daily Pivot Point S3 1,352
Daily Pivot Point R1 1.3831
Daily Pivot Point R2 1.3897
Daily Pivot Point R3 1.3987

Source: Fx Street

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