- The USD/CAD is trying to recover the day’s losses after getting knocked lower.
- The Loonie is catching support from steadily-rising oil costs.
- The USD/CAD is recovering towards the 50% retrace of the day’s declines.
The USD/CAD started Tuesday in freefall, declining from the day’s open near 1.3480 and tapping into 1.3380. Rising oil prices are bolstering the Loonie (CAD), as concerns over global supply constraints knock crude barrel costs into the ceiling.
Despite the Loonie-led dip, the USD/CAD is recovering into the middle ground. Greenback (USD) traders are keeping light on their feet as the next showing from the Federal Reserve (Fed) rounds the corner.
Fed to hold on rates, but investors to watch the rhetoric
The Fed’s latest rate call will be dropping on markets on Wednesday, with the Fed’s rate call and ensuing press conference scheduled for 18:00 GMT tomorrow.
The Fed is broadly expected to stand pat on rates for the time being, holding benchmark rates at 5.5%. The Federal Open Market Committee (FOMC) will also be publishing their economic projections and inflation outlook figures, something that investors will be scrambling to process.
It’s a light economic calendar week for the CAD, and market momentum will be firmly in the hands of crude oil and Greenback traders.
USD/CAD technical outlook
The USD/CAD is drifting into the middle in late Tuesday trading, testing the waters near 1.3450 after the early session’s fast drop.
The pair declined 0.72% from Tuesday’s opening prices near 1.3475, but the mid-day recovery sees the pair nearing the 68% retracement of the day’s drop.
Rapidly increasing crude prices has sent the USD/CAD lower on the daily candlesticks, with the pair set to close in the red for seven of the last eight consecutive trading days.
The Dollar-Loonie pair has slid past the 200-day Simple Moving Average (SMA) in Tuesday’s trading. Continued selling pressure will see the pair challenging the last swing low near 1.3100, while an upside recovery will have to reclaim the 1.3700 handle to establish a determined uptrend.
USD/CAD daily chart
USD/CAD technical levels