Economy Forex News

USD/CAD struggles near more lows around 1.2350

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  • USD/CAD extends its weekly downtrend and falls to more than three-month lows on Friday.
  • Bullish oil prices benefit CAD and put pressure on the pair amid subdued USD demand.
  • The oversold RSI on the 1-hour chart warrants some caution before opening aggressive bearish positions.

USD/CAD remains under pressure during Friday’s European session, trading near the lowest level since July 6 around 1.2350.

USD/CAD

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The crude oil price has remained stable

Crude oil prices expect to stay near multi-year highs in the coming months due to tightening supply. In turn, this has supported the Canadian dollar. A currency whose price movements are tied to commodity prices. Which consequently has been a major headwind to the USD/CAD pair amid subdued USD price levels.

Despite Wednesday’s slightly stronger US CPI report, the dollar has corrected from 13-month highs as investors remain unconvinced about a sustained period of inflation. US Treasury yields have fallen sharply, which has put pressure on the USD.

In addition, markets appear to have fully discounted in price the prospect of an early tightening of monetary policies by the Fed. Combined with the prevailing risk appetite, this has prevented investors from opening new bullish positions around the safe-haven USD. The USD/CAD has been affected by this factor as well.

According to technical indicators, the previous day’s break below the 1.2400 level has confirmed a bearish break of the lower boundary of a short-term descending channel. This may have already set the stage for further losses, although an oversold RSI on the 1-hour chart warrants some caution before opening aggressive bearish positions.

Now the market is watching for U.S. retail sales figures later in the session. Along with US bond yields, this will influence the USD and provide some momentum to the USD/CAD pair. Investors will also take cues from oil price dynamics for some short-term opportunities.

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Michelle D. Madsen

Michelle D. Madsen graduated from the University of Westminster and has been deeply involved in the world of finance ever since. She has worked as a Broadcast Journalist hosting various news shows and informative webcasts about the financial markets. Since 2004 she has also been writing for Metanews daily, her attention to detail, and her in-depth knowledge of the financial markets have led her to cover Foreign Exchange and commodities. The world of finance has changed in the last few years with the introduction and rising popularity of cryptocurrencies. She has in no means been left behind, adding this to her bank of intellect and is now also an expert in cryptocurrencies. For the last ten years, Ms. Madsen has been engaged in the financial market. She has notedly written a great number of incredibly informative reviews for the crypto exchange and forex brokers. Her wealth of knowledge has enabled her to become a leading expert in the field. She continues to inform the public writing up-to-date, thorough reviews for the readers of Metanews as she has for the last decade.
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