USD/CAD Declines As WTI Oil Tests Resistance At $115

Key Insights

• WTI oil rallies towards the $115 level, which is bullish for the Canadian dollar.
• Demand for safe-haven assets stays strong but fails to provide enough support to the U.S. dollar.
• A move below the support at 1.2550 will push USD/CAD towards the support at 1.2525.

U.S. Dollar Is Under Pressure Against Canadian Dollar

USD/CAD is currently trying to settle below the support level at 1.2550, while the U.S. dollar is gaining ground against a broad basket of currencies.

The U.S. Dollar Index continues its attempts to settle above the resistance at 98.70. If the U.S. Dollar Index settles above this level, it will move towards the 99 level, which will be bullish for USD/CAD.

Today, the U.S. reported that New Home Sales declined by 2% month-over-month in February, compared to analyst consensus which called for growth of 1.1%.

The report had minimal impact on USD/CAD dynamics as foreign exchange market traders focused on the developments in commodity markets. WTI oil settled above the $110 level and is currently testing the $115 level amid fears of energy shortage due to sanctions on Russia.

In case WTI oil manages to settle above $115, it will head towards the next resistance level at $117, which will be bullish for commodity-related currencies, including Canadian dollar.

Technical Analysis

USD to CAD is testing the support level at 1.2550. In case this test is successful, USD to CAD will move towards the next support level, which is located at 1.2525.

A successful test of the support at 1.2525 will open the way to the test of the next support at 1.2500. If USD to CAD manages to settle below this level, it will continue its pullback and head towards the support level at 1.2470.

On the upside, the previous support at 1.2590 will serve as the first resistance level for USD to CAD. A move above this level will push USD to CAD towards the resistance at 1.2625. In case USD to CAD climbs above the resistance at 1.2625, it will move towards the resistance at 1.2650.

For a look at all of today’s economic events, check out our economic calendar.