- USDCAD rises to a 1.5-week high, supported by a combination of factors.
- Bearish oil prices weigh on the CAD and lift the pair amid sustained USD buying.
- The technical and fundamental setup supports the prospects for a further appreciation move.
The pair USDCAD extends last week’s bounce from the support of the 100-day SMA and gains some traction on Monday. The momentum leads the pair to reach a maximum of one and a half weeks, around the zone of 1.3425 during the first hour of the European session, and it is due to a combination of factors.
Crude oil prices weaken near its lowest level since September 28, touched on Friday, in the middle of the Concern that worsening COVID-19 situation in China will dent fuel demand. This, in turn, has weighed on the commodity-linked CAD and acted as a tailwind for the USDCAD amid a further US dollar rally.
Market sentiment remains fragile amid concerns about economic headwinds stemming from the Imposition of new COVID-19 lockdowns in China. Furthermore, fears of a potential escalation of the Russia-Ukraine conflict dampen investor appetite for riskier assets and benefit the safe-haven US dollar.
Also, better-than-expected US retail sales data released Thursday casts doubt on the narrative of a spike in inflation. On the other hand, aggressive signals from several Fed officials suggest the US central bank is still some way from pausing its rate hike cyclewhich gives an additional boost to the dollar.
The Fundamental background seems to lean in favor of dollar bulls and supports the prospects of a new intraday appreciation movement for the USDCAD pair. Even from a technical point of view, the sustained force and the acceptance above the 1.3400 level adds credibility to the bullish outlook on the pair.
Therefore, a further move towards the recovery of the psychological level of 1.3500, on the way to the 50-day SMA, currently around 1.3550, seems a clear possibility. In the absence of important economic data releases, the dynamics of the dollar and oil prices will influence the USDCAD pair.
USDCAD 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.
