Weaker Oil Puts Pressure On Canadian Dollar
USD/CAD is currently trying to settle above the resistance at 1.2520 while the U.S. dollar is losing ground against a broad basket of currencies.
The U.S. Dollar Index is testing the nearest support level at 92.40. In case this test is successful, the U.S. Dollar Index will move towards the next support at 92.15 which will be bearish for USD/CAD.
Today, foreign exchange market traders focused on the Bank of Canada Interest Rate Decision. The Bank decided to leave the interest rate unchanged at 0.25% but adjusted its quantitative easing program to a pace of 2 billion per week.
Meanwhile, Jerome Powell’s prepared remarks for his testimony before Congress indicated that Fed was not worried about inflation despite the recent report which showed that Inflation Rate grew by 5.4% year-over-year in June.
Powell’s remarks put pressure on the American currency, but USD/CAD managed to get upside momentum as WTI oil declined below the $74 level which was bearish for commodity-related currencies, including Canadian dollar.
USD/CAD has recently managed to get back above the resistance at 1.2500 and is trying to settle above the next resistance level at 1.2520. In case this attempt is successful, it will head towards the next resistance which is located at yesterday’s highs at 1.2540.
If USD to CAD manages to settle above the resistance at 1.2540, it will move towards the resistance at 1.2560. A move above this level will open the way to the test of the resistance at 1.2590.
On the support side, the previous resistance level at 1.2500 will serve as the first support level for USD to CAD. In case USD to CAD manages to settle back below this support level, it will move towards the next support at 1.2480.
A successful test of this level will push USD to CAD towards the support at 1.2450. This support level has already been tested several times in recent trading sessions and proved its strength, so USD to CAD will need additional catalysts to settle below 1.2450.
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This article was originally posted on FX Empire