USD/CAD Near 1.3700 as Oil Rises Ahead of US GDP & PCE.
USD/CAD Analysis: Loonie Firms Near 1.3700 as Oil Prices Rise Ahead of US GDP & PCE
What’s Happening
USD/CAD trades modestly lower near 1.3695 in early European session, as the Canadian Dollar strengthens on the back of rising crude oil prices. The pair remains close to the 1.3700 level, with traders awaiting key US economic releases later today.
Markets are focusing on Canada’s Retail Sales data and the US Q4 GDP and PCE Price Index, which could drive volatility in USD/CAD today.
Market Overview (Fundamental Analysis)
The Canadian Dollar is drawing support from firmer oil prices, as geopolitical tensions continue to underpin energy markets. According to recent comments, US President Donald Trump warned that Iran has limited time to reach a nuclear agreement, raising concerns about potential supply disruptions.
Since Canada is a major oil exporter, higher crude prices typically strengthen the Loonie, pressuring USD/CAD lower.
On the US side, labor market data showed resilience. The US Department of Labor reported that Initial Jobless Claims fell to 206,000, beating expectations and reinforcing the view of a still-tight labor market.
However, broader direction may depend on upcoming data:
- US Q4 GDP (Advance estimate)
- US Personal Consumption Expenditures (PCE) Price Index — the Federal Reserve’s preferred inflation gauge
- Canada Retail Sales
Stronger US inflation or growth data could revive support for the US Dollar, especially if it reinforces a cautious stance from the Federal Reserve.
Technical Snapshot (Daily / Short-Term Outlook)
| Indicator | Reading / Value | Implication |
|---|---|---|
| Trend | Uptrend (ascending channel) | Bullish bias |
| Key Resistance | 1.3703 | Immediate ceiling |
| Key Support | 1.3617 | Near-term floor |
| RSI | Above 60 (Buying zone) | Positive momentum |
| MACD | Neutral to Positive | Upward bias |
| Moving Averages | Above 50 & 200 SMA | Strong trend structure |
USD/CAD remains within an ascending channel and trades above its key moving averages, indicating that the broader trend structure remains constructive. However, price is approaching resistance near 1.3703, and a confirmed breakout would be needed to extend gains toward higher levels.
Trade Idea (Setup Section)
- Trade Type: Stop Buy
- Entry Level: 1.3713
- Take Profit: 1.3794
- Stop Loss: 1.3674
- Rationale: A sustained break above immediate resistance could confirm bullish continuation within the ascending channel.
Alternate Scenario:
If USD/CAD falls below 1.3617, the pair could retest deeper support within the channel, potentially shifting short-term momentum to the downside.
What to Watch Next
Key catalysts for the USD/CAD forecast include:
- US PCE Price Index
- US Q4 GDP data
- Canada Retail Sales
- Crude oil price movements amid geopolitical headlines
- Broader US Dollar sentiment
Key Takeaway
USD/CAD remains technically supported within an ascending channel, though near-term direction will hinge on US inflation and growth data. A decisive move above 1.3703 could strengthen the bullish outlook, while oil-driven CAD strength may limit gains.
Q&A – USD/CAD Forecast
Why is USD/CAD trading near 1.3700 today?
USD/CAD is hovering near 1.3700 as rising oil prices support the Canadian Dollar, while traders await US GDP and PCE inflation data.
What is the current USD/CAD technical outlook?
The USD/CAD technical outlook remains bullish within an ascending channel, with price trading above major moving averages.
What are the key levels in USD/CAD analysis?
Immediate resistance stands at 1.3703, while support is seen at 1.3617 in the current USD/CAD forecast.
Disclaimer: This market analysis is for informational purposes only and does not constitute financial advice or a recommendation to trade.
