Rising oil prices are supporting the Canadian dollar. After reaching the high of 1.3078, the USDCAD went in a correction and reached the support level 1.2835. Higher oil prices and a weaker US dollar support the loonie. Rising inflation strengthens traders’ confidence in the Bank of Canada to raise interest rates which is reflected positively to the national currency. Another factor influencing the depreciation of the dollar is the investors’ desire to buy an asset at better prices before the next FED meeting on interest rates.
The currency pair rebounded lower from a resistance high of 1.3078 and is trading within a downward channel. The support level 1.29 was broken followed by a combined bearish crossover on the MACD which keeps sellers hopeful for further downside. Breaking 1.28 will open the door toward the 1.2758 support zone. Buyers must break level 1.28890 to confirm the bullish momentum toward 1.3017.
Key levels to watch from the downside 1.28, 1.2758 – from the upside 1.28890, 1.29955, 1.3017