- USD/CAD breaks out of range and falls to test Wednesday’s low.
- Wall Street indices rise sharply, extending the rebound.
- Crude oil prices rise more than 3%, WTI approaches $110.00.
The USD/CAD It broke below 1.2990 and fell quickly to 1.2923, a two-day low. It is hovering around 1.2945/50, still up for the week but significantly off the highs. Still, the USD/CAD pair is on track for the highest weekly close since November 2021.
Market Sentiment Drives Canadian Dollar
The US dollar fell after the start of the US session amid an improvement in market sentiment. The rally in US stocks and crude oil helped USD/CAD break out of the downside range.
The Dow Jones rises 1.41% while the Nasdaq gains 3.35%. Crude prices have risen more than 3%. A barrel of WTI is trading at $109.38, more than $10 above Wednesday’s low.
The US dollar index is pulling back from multi-year highs. Earlier on Friday, it reached levels above 105.00 and at the time of writing it is trading at 104.65 down 0.10%. DXY falls for the first time after rising for six straight days.
A strong barrier at 1.2920
Technical factors contributed to the decline in USD/CAD. The breakout of the range gave the loonie more momentum. The drop found support at the 1.2920 area which also contained losses on Wednesday. The 200 hourly simple moving average is also seen around that area. A break below 1.2920 should open the doors for a test of 1.2900. Next, the next support could be located at 1.2865/70.
USD/CAD looks bearish in the very short term. However, a recovery above 1.3020 should change the outlook to neutral/bullish. Above this level, resistance awaits at 1.3045.
Technical levels
Source: Fx Street
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