USD/CAD Price Analysis: Oil Demand Worries Weighing on CAD

• Investors expressed concerns about a potential slowdown in China.

• China’s slowdown could adversely affect the global economy and reduce commodity demand.

• The Bank of Canada will release the minutes of its policy decision from two weeks ago.

Today’s USD/CAD price analysis is slightly bullish. The Canadian dollar lost strength against the US dollar, relinquishing some recent gains. Investors expressed concerns about a potential slowdown in China, which could adversely affect the global economy and reduce commodity demand. 

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Darren Richardson, the Chief Operating Officer at Richardson International Currency Exchange Inc., stated that the market’s risk appetite has diminished. Furthermore, he emphasized that if China faces difficulties, it could indicate problems in other parts of the world. It’s worth noting that Canada is a significant producer of commodities, including oil. 

Elsewhere, the price of US crude oil futures dropped by 1.8% to $70.50 per barrel. This was due to forecasts indicating slower growth in oil demand in China and disappointment regarding the magnitude of cuts in China’s major lending rates. 

Furthermore, on Wednesday, the Bank of Canada will release the minutes of its policy decision from two weeks ago. The Bank of Canada raised its benchmark rate for the first time since January in an attempt to moderate economic growth and achieve a target inflation rate of 2%. 

In addition, Canada’s national statistics agency revealed new weights for its basket of goods and services in the Consumer Price Index. It assigned greater importance to changes in food and gasoline prices.

USD/CAD key events today

Investors are focusing on Federal Reserve Chair Jerome Powell’s upcoming appearance before Congress, anticipating that he will adopt a hawkish tone.

USD/CAD technical price analysis: Buyers test the downtrend at the 30-SMA.

On the 4-hour chart, the downtrend for USD/CAD has paused at the 1.3200 support. At the moment, bulls are challenging the 30-SMA resistance. Still, the bias remains bearish as long as the price stays below the SMA and the RSI trades under 50.

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If the 30-SMA holds firm, the price will bounce lower to take out the 1.3200 support and seek new lows.

On the other hand, if bulls break above the 30-SMA resistance with the RSI crossing above 50, a reversal will occur. Bulls would then have to start making higher highs and lows to confirm the reversal. Consequently, this would mean a retest and break above the 1.3351 resistance.

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