- The Dollar extends its gains favored by risk aversion.
- Falling oil prices weigh on the Canadian dollar.
- The corrective recovery of USD/CAD could find resistance at 1.3600 and 1.3620.
The US dollar maintains a moderately buying tone in the European session on Tuesday and moves away from the two-month highs, in the 1.3475 area that it reached on Monday.
The dollar is receiving support from the risk aversion sentiment in the markets. Investors are reluctant to make risky bets pending the release of US employment data confirming that the Federal Reserve’s tightening cycle has come to an end.
The drop in oil prices hurts the Canadian dollar
Beyond that, the decline in oil prices, with the US benchmark WTI hovering just above five-month lows at $72.20, is acting as a headwind for the CAD.
In Canada, the Bank of Canada is expected to keep rates at the current level of 5% and begin to step back in the tightening cycle in early 2024.
From a technical point of view, the pair is correcting higher, following a 3% sell-off in November. Next resistances likely lie at the 50 4-hour SMA at 1.3600 ahead of the Nov 30 high at 1.3622 and 1.3700.
Supports are 1.3520 and December 4 low at 1.3475.
USD/CAD Technical Levels
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.
