- USD/CAD gains some positive traction and hits a two-month high on Thursday.
- A further rise in oil prices weakens the loonie and offers support to the pair.
- The weak demand for dollars does not impress the bulls or provide a significant boost.
The pair USD/CAD hits a 2-month high during the early American session and looks to build on momentum beyond 1.3200.
A further drop in oil prices undermines the commodity-linked loonie and turns out to be a key factor pushing USD/CAD higher. Concerns that a deeper global economic slowdown will hit fuel demand overshadow concerns about tight supply and weigh on the black liquid.
On the other hand, the US dollar is struggling to gain traction and is little moved in reaction to mixed US macroeconomic data, although it remains well supported by Fed expectations. This is seen as another factor acting as a tailwind. tail for the USD/CAD pair and favors bullish traders.
That said, repeated failures to build on momentum beyond 1.3200 constitute multiple top formations on short-term charts. This makes it prudent to wait for a strong follow-through on buying new bullish bets around the USD/CAD pair and position yourself for further gains.
However, the fundamental backdrop suggests that the path of least resistance is to the upside. Traders, however, might prefer to stay on the sidelines ahead of next week’s FOMC meeting, which will influence USD price action and provide a further directional boost to the USD/CAD pair.
Technical levels
Source: Fx Street
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