USD/CAD: Buyers and Sellers Face Off Amid Rising Oil Prices
Market Overview
On Tuesday, the US dollar is trading near its highest level in over two years as strong economic data tempered expectations of aggressive rate cuts in the US during 2025. However, the rising price of crude oil has provided fundamental support for the Canadian dollar, creating a battleground between buyers and sellers in the USD/CAD pair. This dynamic reflects the intersection of divergent economic drivers, highlighting the interplay of global energy markets and monetary policy expectations.
Technical Analysis
In the hourly chart, USD/CAD has broken its short-term ascending trendline that originated on January 6, signaling a shift to a near-term bearish outlook. The price recently reversed from the resistance at 1.43872, marking it as a significant cap for further upside. Currently, the pair is testing the critical support at 1.43596, derived from the 61.8% Fibonacci retracement of the recent upswing. This level has become a focal point for the ongoing tussle between buyers and sellers, adding to the uncertainty in market direction.
If sellers gain the upper hand and successfully break below 1.43596, it would signal further downside potential. A confirmed breach could target subsequent support levels at 1.43426, 1.43305, 1.43150, and ultimately 1.42980. The moving averages align with this bearish sentiment, reflecting broader downward momentum. However, the MACD indicates waning selling pressure, suggesting a potential slowdown in bearish momentum.
On the other hand, if buyers manage to defend the 1.43596 support and push prices higher, overcoming the resistance at 1.43872, the bullish trend may resume. Such a move would attract renewed interest from long positions, aiming to extend gains beyond the recent highs.
Key levels
- Resistances: 1.43872
- Supports: 1.43596, 1.43426, 1.43305, 1.43150, 1.42980
Key Events to Watch
Investors are closely monitoring upcoming US Producer Price Index (PPI) data for further insights into inflationary trends, which could shape the Fed’s policy outlook. Additionally, the upward trajectory of oil prices has added a new dimension to USD/CAD dynamics, given the Canadian economy’s reliance on energy exports. Developments in global energy markets, alongside US economic indicators, will likely dictate the pair’s short-term trajectory.
Conclusion
USD/CAD currently trades in a state of flux, with the critical support at 1.43596 acting as a key battleground. A break below this level could pave the way for further declines, while a successful rebound above 1.43872 would reestablish bullish momentum. Traders should remain vigilant, as developments in US inflation data and oil markets are poised to significantly impact the pair’s direction.
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