USD/CAD Daily Price Forecast – USD/CAD Falls Sharp On Hike in US Crude Oil Price

The USDCAD pair is on steady downtrend since trading session opened for the week and the fall is closing in on 1% now as the pair trades at its lowest level since 20 November. It’s a case of a double whammy for USD/CAD as risk is helping to boost sentiment in the loonie while weakening the dollar, but also oil is benefiting from the resurgence in risk and that’s helping to add a second layer of bids in the loonie. The USD/CAD pair weakened farther below the 1.3200 handle and is trading at 1.3174 down by 0.91% on the day as of writing this article. The combination of factors mentioned above kept a lid on the pair’s attempted recovery during the Asian session which prompted some aggressive selling near the 1.3265-70 region.

Crude Oil Price Action Supports Canadian Loonie Which Is Already Boosted By Risk Appetite in Market

The US Dollar remained heavily offered amid the latest trade-related optimism, wherein the world’s two largest economies agreed not to impose additional trade tariffs for at least 90 days. This coupled with a strong rally in crude oil prices, supported by firming expectations of supply cut at an OPEC meeting on Dec. 6, further underpinned the commodity-linked Loonie and exerted some additional downward pressure.Oil price was also boosted owing to news of production cut from Canada in Alberta region by 8.7% (i.e.,) 325000 barrels per day to address pipeline bottleneck that has led to crude building up in storage. The most notable factor and reason the production cut in Canada boosted US dollar is because crude oil from Alberta region is primarily exported  to United States.

Meanwhile, the latest leg of a sudden fall over the past hour or so could further be attributed to some fresh technical selling/long-unwinding pressure on a sustained breakthrough the 1.3200 handle. A subsequent weakness below the 1.3185 strong horizontal support, held over the past 1-1/2 week, now seems to have opened the room for an extension of the intraday bearish slide. Hence, a follow-through downfall, ahead of today’s release of scheduled speeches by influential FOMC members and the US ISM manufacturing PMI, now looks a distinct possibility. Immediate support is now pegged near mid-1.3100’s, which is followed by the 1.3125 horizontal zone and the 1.3100 handle. On the flip side, any attempted recovery now seems to confront immediate resistance near the 1.3200 mark, above which a bout of short-covering could lift the pair back towards 1.3245-50 region.