- USD/CAD rises to a 1-week high and is supported by a combination of factors.
- Oil prices weaken the Loonie and act as a tailwind amid sustained USD buying.
- Sustained strength beyond 1.3400 could have set the stage for further gains.
The pair USD/CAD It is supported by last week’s bounce from support at the 100-day SMA, or a two-month low, and gains some trailing traction on Monday. The pair is holding its offered tone throughout the early American session and is currently trading near a 1.5-week high just below 1.3450.
Crude oil languishes near the lowest level since September 28 amid concerns that the worsening COVID-19 situation in China will dent demand for fuel. This, in turn, undermines the commodity-linked Loonie and acts as a tailwind for the USD/CAD pair amid the US dollar’s ongoing recovery from a three-month low.
From a technical point of view, sustained strength beyond the 23.6% Fibonacci level retracement level of the correction from a 2+ year high could be seen as a trigger for bullish traders. This, in turn, continues to support the intraday positive move and supports the prospects for further appreciation in the near term.
That being said, the oscillators on the daily chart – although they have rebounded from negative territory – still do not confirm an uptrend and warrant caution. Therefore, any further move higher could attract some sellers near the psychological level of 1.3500 and remain limited near the support point of the 50-day SMA around 1.3550.
On the other hand, the break point of the 1.3400 resistance seems to protect the immediate downside. The next relevant support is in the 1.3325 area. It is followed by near 1.3300, which if broken could expose support at the 100 DMA, currently around the 1.3255-1.3250 area, or the monthly low hit last week.
USD/CAD daily chart
Key levels to watch
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
