USD/CAD Climbs Amidst Trump Incident and Falling Oil Prices
During the European trading session, the USD/CAD pair demonstrated a continued uptrend, stabilizing around the 1.3685 mark and peaking at 1.3695.
This uptick is largely driven by a stronger U.S. dollar, propelled by the aftermath of a foiled attack on former President Donald Trump—a situation that seemingly improved his odds in the upcoming 2024 election and fueled expectations of regulatory easing.
Moreover, the dip in oil prices exerted additional pressure on the oil-sensitive Canadian Dollar, amplifying gains for the USD/CAD.
Economic Slowdown in China Dampens Oil, Impacts USD/CAD
The price of West Texas Intermediate (WTI) oil has retreated over three sessions, now hovering around $80.30 per barrel.
This decline corresponds with a noticeable slowdown in the Chinese economy, as recent figures showed a drop in GDP growth from 5.3% to 4.7% year-over-year in the second quarter, failing to meet the anticipated 5.1%.
This reduced pace, noted by the National Bureau of Statistics, has had a direct effect on global oil demand, considering China’s role as a major oil consumer.
Consequently, this scenario has bolstered the USD/CAD ratio, as investors recalibrate their expectations for Canada’s currency in light of China’s economic performance and upcoming Canadian CPI inflation data.
Federal Reserve Policy and U.S. Dollar Dynamics Shape USD/CAD Outlook
The U.S. dollar’s resilience is further reinforced by speculations around Donald Trump’s potential policy directions and the implications for U.S. economic policy, including expectations of increased government debt and inflation.
These factors are keeping the dollar robust against its Canadian counterpart. Meanwhile, comments from Federal Reserve Chair Jerome Powell suggesting a cautious approach towards interest rate cuts—aimed at sustainably achieving inflation targets—have somewhat moderated gains.
Yet, the Fed’s potential easing measures, along with a cooling inflation trend noted by Fed Bank of San Francisco President Mary Daly, suggest that rate adjustments are likely on the horizon, which could influence the USD/CAD pair further.
USD/CAD Technical Perspective and Market Strategy
Presently, the USD/CAD pair trades slightly above the previous close at $1.36888. Technical indicators on the 4-hour chart show a pivot point at $1.3692 with potential resistance up to $1.3782 and support down to $1.3629.
The Relative Strength Index (RSI) near 65 signals that the pair might be entering overbought territory, suggesting that traders might exercise caution around these levels. The bullish trend is supported as long as prices stay above the 50-day EMA at $1.3634.
For those trading this currency pair, buying above $1.36783 with a target of $1.37133 and a protective stop-loss at $1.36591 could be considered, given the current market conditions.
This comprehensive analysis not only explores the factors influencing the current state of the USD/CAD exchange rate but also provides actionable insights for traders monitoring this dynamic currency pair.
ABOUT THE AUTHOR
See More
Sidebar rates
Related Posts
SaveAdd 3440
Join 350 000+ traders receiving Free Trading Signals
Alerts
Rates
Calendar
Signals