USD/CAD Rebounds As WTI Oil Slips Towards The $105 Level

Key Insights

• USD/CAD is moving higher as WTI oil suffers a strong pullback. 
• Traders will stay focused on the dynamics of commodity markets and Treasury markets. 
• USD/CAD must settle above the resistance at 1.2590 to continue its rebound.

U.S. Dollar Gains Ground Against Canadian Dollar

USD/CAD is currently trying to settle above 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 99.20. In case the U.S. Dollar Index manages to settle above this level, it will get to the test of the next resistance at 99.45, which will be bullish for USD/CAD.

Today, the U.S. reported that Wholesale Inventories increased by 2.1% month-over-month in February, while analysts expected that they would grow by 0.7%.

The report had no material impact on currency dynamics as traders focused on the developments in commodity markets and U.S. government bond markets.

WTI oil suffered a strong sell-off and made an attempt to settle below the $105 level on worries about coronavirus lockdowns in China. In case WTI oil settles below $105, it will head towards the psychologically important $100 level, which will be bearish for commodity-related currencies, including Canadian dollar.

Meanwhile, Treasury yields have pulled back from their recent highs, but it remaisn to be seen whether this pullback will continue as current yields remain well below inflation. Lower yields are bearish for the American currency.

Technical Analysis

USD to CAD is currently trying to stay above the 1.2550 level. In case this attempt is successful, USD to CAD will move towards the resistance at 1.2590.

A move above the resistance at 1.2590 will push USD to CAD towards the next resistance at the 20 EMA at 1.2625. If USD to CAD settles above the 20 EMA, it will move towards the resistance level at 1.2650.

On the support side, a move below 1.2550 will push USD to CAD towards the support at 1.2525. If USD to CAD declines below this level, it will head towards the next support at 1.2500. A successful test of the support at 1.2500 will open the way to the test of the next support level at 1.2470.

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