USD/CAD Weakens Near 1.3700 as Oil and Loonie Gain
USD/CAD stays limited near the 1.3700 mark as improved market sentiment boosts demand for the loonie.
FUNDAMENTAL OVERVIEW:
The Canadian Dollar strengthened against a softer U.S. Dollar on Monday, recovering from a three-day decline as improved market sentiment and elevated oil prices provided a more supportive backdrop for the loonie.
Investor anxiety eased after U.S. President Donald Trump signalled he would take two weeks to decide on possible involvement in the Middle East conflict, raising hopes for a diplomatic resolution.
The U.S. Dollar had gained nearly 1% over the previous three days, benefiting from safe-haven demand amid fears of a potential military escalation between the U.S. and Iran.
Despite the improved market mood, oil prices remain firm near the $75 level amid ongoing concerns that the conflict could disrupt crude supply. As one of the world’s leading oil exporters, Canada typically sees its currency strengthen alongside rising oil prices.
Later today, Canadian Retail Sales data is expected to show a slowdown in consumer spending, easing to 0.4% in May from 0.8% in April. However, excluding auto sales, core retail activity is projected to have risen by 0.2%, recovering from a 0.7% decline in the prior month.
The broader trend for USD/CAD remains bearish, with the pair down nearly 3% over the past four weeks and trading about 5% below its April highs, as uncertainty surrounding Trump’s trade policies continues to weigh on the U.S. Dollar.
USD/CAD TECHNICAL ANALYSIS CHART:
Technical Overview:
USD/CAD is trading within a down channel.
USD/CAD is moving below all the Moving Averages (SMA).
The Relative Strength Index (RSI) is in the Neutral Zone, while the Stochastic oscillator suggests a Neutral trend.
Immediate Resistance level: 1.3750
Immediate support level: 1.3692
HOW TO TRADE USD/CAD
After a sustained downward move, USD/CAD found support and rebounded, briefly breaking through a key resistance zone. However, the pair failed to sustain the breakout and sharply reversed, breaking below critical support. Currently, it’s attempting another upward move but is facing rejection at the resistance level, where the price is getting weaker. If the immediate support is breached, further downside may follow.