USD/CAD Price Prediction – Canadian Dollar Retreats Despite Rising Oil

Key Insights

• USD/CAD managed to gain some upside momentum ahead of the weekend. 
• WTI is up by more than 3%, but this move failed to provide enough support to the Canadian currency. 
• A move above 1.2850 will push USD/CAD towards the resistance at 1.2885.

U.S. Dollar Gains Ground Ahead Of The Weekend

USD/CAD is currently trying to get back above 1.2850 as the U.S. dollar rebounds against a broad basket of currencies.

Today, the U.S. Dollar Index made an attempt to settle below the important 106 level but lost momentum and rebounded towards 106.50. This move provided support to USD/CAD, which managed to gain some ground despite rising oil prices.

WTI oil continues to move higher despite recession fears as traders are focused on problems with supply. In addition, the recent EIA Weekly Petroleum Status Report indicated that crude inventories declined by 4.5 million barrels, which was bullish for oil markets. In case the current trend in the oil market continues, commodity-related currencies will get more support, which will be bullish for the Canadian dollar.

Support At 1.2800 Stays Strong

USD/CAD has recently managed to settle back above the resistance at 1.2825 and is trying to settle above the next resistance level at 1.2850.

In case this attempt is successful, USD/CAD will move towards the next resistance, which is located at the 50 EMA at 1.2885. RSI is in the moderate territory, so there is plenty of room to gain additional upside momentum in case the right catalysts emerge. If USD/CAD settles above the 50 EMA, it will get to the test of the 20 EMA at 1.2900.

On the support side, the previous resistance level at 1.2825 will serve as the first support level for USD/CAD. If USD/CAD declines below this level, it will head towards the next support at 1.2800. This support level has been tested several times in recent trading sessions and proved its strength. In case USD/CAD manages to settle below the support at 1.2800, it will head towards the next support level at 1.2780.

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