USD/CAD Declines As WTI Oil Gets Back Above $95

Key Insights

• Canadian dollar moves higher as WTI oil rallies
• A move below 1.2680 will push USD/CAD towards 1.2650
• Geopolitics remain the key driver for the forex market

Canadian Dollar Gains Ground Against U.S. Dollar

USD/CAD is currently trying to settle below the support at 1.2680, while the U.S. dollar is gaining ground against a broad basket of currencies.

The U.S. Dollar Index is currently stuck in the range between the support at 96.70 and the resistance at 97. If the U.S. Dollar Index manages to settle back above 97, it will gain upside momentum and head towards the resistance at 97.25, which will be bullish for USD/CAD.

Today, foreign exchange market traders focused on geopolitical developments. The West imposed harsh sanctions on Russia, which triggered a flight to safety but also provided support to the oil market.

WTI oil managed to get back above the $95 level and made an attempt to settle above $98 but lost momentum and pulled back towards $96. In case WTI oil manages to settle above $96, it will move closer to the recent highs near $98, which will be bullish for commodity-related currencies, including Canadian dollar.

Technical Analysis

USD to CAD is testing the support level at 1.2680. In case this test is successful, USD to CAD will move towards the next support level, which is located at 1.2650.

A move below the support at 1.2650 will open the way to the test of the support at 1.2625. If USD to CAD declines below this level, it will head towards the next support level at 1.2590.

On the upside, the nearest resistance level for USD to CAD is located at the 50 EMA at 1.2705. If USD to CAD moves above the 50 EMA, it will gain upside momentum and head towards the 20 EMA at 1.2725. A successful test of the resistance at the 20 EMA will push USD to CAD towards the resistance at 1.2760.

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