- USD/CAD regains positive traction on Thursday and is supported by a combination of factors.
- Crude oil bearish prices weaken near a multi-month low and continue to weigh on the CAD.
- A modest rally in the dollar acts as a tailwind for the pair ahead of Fed Chairman Jerome Powell’s speech.
The pair USD/CAD it has quickly recovered from an intraday drop to the 1.3100 area and has risen to a new daily high during the first half of the European session. The pair has reversed much of the previous day’s losses and is currently trading just below 1.3150.
As investors assimilate a tougher Bank of Canada, weakening crude oil prices continue to weigh on the CAD, linked to commodity prices, and help the USD/CAD pair regain positive traction on Thursday. It should be remembered that the Canadian central bank raised its benchmark rates by 75 basis points on Wednesday and indicated the need to raise interest rates further. However, this is overshadowed by the underlying bearish sentiment around the oil markets.
Investors continue concerned that a deeper global economic downturn and headwinds stemming from further COVID-19 cuts in China will translate into lower fuel demand. This largely offsets concerns about tight global supply and drags crude oil prices to the lowest level since February 2022. Apart from this, the appearance of some buying at lower levels in the US dollar extends support. addition to the USD/CAD pair and contributes to the intraday move higher in the pair.
The expectations that the Fed will continue to tighten monetary policy more aggressively to tame inflation help limit the USD’s pullback from a two-decade high. Despite the supportive factors, the bulls might prefer to wait for Fed Chairman Jerome Powell’s speech at the beginning of the American session before opening new positions on the USD/CAD pair. However, the fundamental background supports the prospects for a further move higher in the short term.
USD/CAD technical levels
Source: Fx Street
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