USD/CAD Eyes 1.3800 as Oil Drops Weigh on Loonie
USD/CAD attempts to reclaim the 1.3800 level as soft Oil prices weigh on the Loonie
FUNDAMENTAL OVERVIEW:
The US Dollar is recovering on Tuesday as markets stabilize following the disappointing Nonfarm Payrolls report. Meanwhile, the Canadian Dollar remains under pressure, with falling Oil prices overshadowing weak US data and expectations of upcoming Fed rate cuts.
The greenback is gaining modestly alongside rising US Treasury yields. USD/CAD is testing levels above 1.3800, rebounding from Friday’s 1.3760 low, though still below last week’s 1.3880 peak.
US factory orders fell 4.8% in June—driven by a drop in aircraft purchases—slightly better than the 4.9% forecast but a sharp reversal from May’s 8.3% gain. Additionally, comments from San Francisco Fed President Mary Daly urging timely rate cuts amid a softening labor market have boosted expectations for a September Fed move, supporting the Dollar’s recovery.
Investors now await US services PMI data, expected to show July expansion, potentially offsetting weak manufacturing numbers.
In contrast, the Canadian Dollar is weighed down by declining Oil prices, with WTI Crude sliding nearly $5 in under a week. OPEC+’s approval of a 547,000 barrel-per-day supply increase has intensified oversupply concerns amid fragile global economic conditions.
USD/CAD TECHNICAL ANALYSIS CHART:
Technical Overview:
USD/CAD is trading within an up channel.
USD/CAD is moving above 50&100 Moving Averages (SMA).
The Relative Strength Index (RSI) is in Buying Zone, while the Stochastic oscillator suggests Neutral trend.
Immediate Resistance level: 1.3814
Immediate support level: 1.3756
HOW TO TRADE USD/CAD
Following a prolonged decline, USD/CAD found support and rebounded higher. The pair has since breached a key resistance zone and is now retesting it as a potential support level. With bullish signals emerging, a sustained hold above this area could pave the way for further upward momentum.