- Oil prices are edging higher on expected OPEC+ supply cuts
- The US dollar rose to a 20-year high yesterday.
- Unrest in Libya has raised supply concerns in the market.
Today’s USD/CAD price analysis is bearish as the Canadian dollar strengthens on rising oil prices. The expected supply cuts from OPEC+ and the fighting in Libya helped to offset a strong US currency and a bleak forecast for US growth. Oil prices ended up more than 4% on Monday, extending last week’s gain and pushing USD/CAD lower.
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Last week, the Organization of the Petroleum Exporting Countries (OPEC)’s producer, Saudi Arabia, said production would be reduced. According to sources, this might coincide with an increase in Iranian supply should Iran successfully negotiate a nuclear agreement with the West.
“Oil prices are inching higher on hopes of a production cut from OPEC and its allies to restore market balance in response to the revival of Iran’s nuclear deal,” said Sugandha Sachdeva, vice president of commodity research at Religare Broking.
The strong US dollar, which rose to a 20-year high on Monday as the Federal Reserve chairman indicated that interest rates would be kept higher to combat inflation, restrained the increase in oil prices. USD/CAD would also have fallen lower had it not been for the rising US dollar.
The weekend’s unrest in the capital of Libya, which left 32 dead, raised fears that the country could degenerate into a full-fledged conflict, disrupting the oil flow from the OPEC member. Such an occurrence would only increase supply concerns and boost oil prices.
USD/CAD key events today
USD/CAD investors will pay attention to consumer confidence and job report from the United States later in the day. These releases will give clues on the health of the economy thus far.
USD/CAD technical price analysis: Bears leaping over support levels heading for 1.2900
The 4-hour chart shows the price attempting a break below the 30-SMA after breaking below 1.30104, a strong support level. The RSI is also trading slightly below 50, showing a possible shift in sentiment from bullish to bearish.
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Looking at the size of recent bearish candles, it is clear that bears have a lot of momentum and will likely break below the 30-SMA. If this happens, the next hurdle will be at 1.29014.
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