USD/CAD Price Analysis: Oil Rising on Supply Concerns, Boosting CAD

USD/CAD Price Analysis: Oil Rising on Supply Concerns, Boosting CAD

  • 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.

-Are you interested in learning about the forex indicators? Click here for details-

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

USD/CAD price analysis

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.

Are you interested in learning more about British Trade Platform Review? Check our detailed guide-

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.

Looking to trade forex now? Invest at eToro!

75% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.


Saqib Iqbal

Saqib Iqbal

Saqib Iqbal is a market analyst, prop fund trader and mentor, serving the industry with his analysis and educational content since 2011. The author has great exposure to different financial markets and institutions. He's well-known for his day trading reviews and multiple timeframe analysis.