USD/CAD Pulls Back Despite Oil Market Sell-Off
- USD/CAD faced strong resistance near 1.2890 and declined towards the support level at 1.2800.
- Riskier assets enjoy strong support today, which is bullish for the Canadian currency.
- A move below 1.2800 will push USD/CAD towards the support at 1.2780.
Canadian Dollar Rebounds Against U.S. Dollar
USD/CAD is currently trying to settle below the support at 1.2800, while the U.S. dollar is losing ground against a broad basket of currencies.
The U.S. Dollar Index managed to settle below the support at 98.35 and is testing the next support level at 98. If this test is successful, the U.S. Dollar Index will move towards the next support at 97.75, which will be bearish for USD/CAD.
Today, foreign exchange market traders remained focused on geopolitical news. The markets hope that the new round of negotiations between Russia and Ukraine, which is scheduled to take place tomorrow, will yield positive results.
These hopes put pressure on safe-haven assets like gold and the U.S. dollar. WTI oil pulled back towards the $117 level, but cheaper oil did not put any pressure on the Canadian dollar as strong demand for riskier currencies provided solid support.
USD to CAD gained strong downside momentum and is testing the support level at 1.2800. If this test is successful, USD to CAD will move towards the next support at 1.2780.
A move below the support at 1.2780 will open the way to the test of the support at 1.2760. If USD to CAD declines below this level, it will head towards the next support level at the 20 EMA at 1.2745.
On the upside, the previous support at 1.2830 will serve as the first resistance level for USD to CAD. In case USD to CAD gets above this level, it will head towards the next resistance level at 1.2850. A successful test of this level will push USD to CAD towards the resistance near the recent highs at 1.2890.
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