USD/CAD Rebounds As WTI Oil Pulls Back From Yearly Highs

Key Insights

• USD/CAD gained ground as WTI oil moved back to the $110 level. 
• Geopolitical events remain the key driver for markets as the second round of negotiations between Russia and Ukraine begins. 
• A move above 1.2680 will push USD/CAD towards the resistance at 1.2700.

U.S. Dollar Moves Higher Against Canadian Dollar

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

The U.S. Dollar Index is testing the resistance level at 97.75. If this test is successful, the U.S. Dollar Index will move towards the next resistance at 98, which will be bullish for USD/CAD.

Today, the U.S. released Initial Jobless Claims report, which indicated that 215,000 Americans filed for unemployment benefits in a week, compared to analyst consensus of 225,000.

The final reading of U.S. Services PMI report indicated that Services PMI increased from 51.2 in January to 56.5 in February, compared to analyst consensus of 56.7. Factory Orders increased by 1.4% month-over-month in January, compared to analyst consensus of 0.7%.

Foreign exchange market traders also continued to monitor the developments in the commodity markets. WTI oil pulled back towards the $110 level after an unsuccessful attempt to settle above $116.50, which was bearish for the Canadian dollar.

Technical Analysis

USD to CAD is testing the resistance at 1.2680. In case USD to CAD moves above this level, it will head towards the next resistance at the 50 EMA at 1.2700.

A successful test of the resistance at the 50 EMA at 1.2700 will open the way to the test of the resistance at the 20 EMA at 1.2715. If USD to CAD gets above the 20 EMA, it will head towards the resistance at 1.2750.

On the support side, the nearest support level for USD to CAD is located at 1.2650. If USD to CAD manages to settle below this level, it will move towards the next support at 1.2625. A successful test of this level will push USD to CAD towards the support at 1.2590.

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