Home USD/CAD Price Approaching 1.2700 as Crude Oil Surges Above 113.00
Majors

USD/CAD Price Approaching 1.2700 as Crude Oil Surges Above 113.00

  • Positive core retail sales data contributed to Thursday’s move lower, which extended into Friday morning.
  • The Canadian dollar strengthens as the US dollar weakens in the slowing economy.
  • Investors expect the impending ban on Russian oil to push USD/CAD lower.

The USD/CAD price closed Thursday lower on a bearish candle, and this continued into Friday morning as the pair kept pushing lower. Canada’s core retail sales surprised investors at 2.4%, which was much higher than the previous 1.8%, supporting the move. These higher retail sales indicate an increase in consumer spending, which is positive for the Canadian economy, hence the strength experienced by the Canadian dollar.

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At the same time, poor data coming out on Thursday from the US on GDP and pending home sales saw the dollar weaken, pushing USD/CAD lower. Global factors are the main drivers of the Canadian dollar as they affect commodity prices. Some of the strength experienced by the Canadian dollar comes from rising oil prices as they export more expensive oil to their consumers around the globe.

An impending EU ban on Russian oil due to the war in Ukraine will affect the supply and keep driving oil prices higher. These price pressures, in turn, could see USD/CAD seeking lower prices.

Another thing making the Canadian dollar stronger is the confirmation by economists polled by Reuters that the Bank of Canada will hike its overnight rate by 50 basis points on June 1. It is only the right thing to do with inflation at 6.8% in April. However, Canada’s economy will likely be extra sensitive to rate hikes after Canadians borrowed heavily to participate in the booming housing market during the pandemic.

USD/CAD price technical analysis: Bears looking for the subsequent lows at 1.2700

USD/CAD price

The USD/CAD pair is trading below the 30-SMA, showing the trend is down on the 4-hour chart. However, bears have not yet shown their strength as the RSI remains above 30. If bears can get oversold prices, it would confirm this new direction.

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The price experienced a lot of support at 1.2800, where bulls tried to take it back above the 30-SMA and failed. The price has broken through 1.2800 and is currently trading at around 1.2750. The next point for this bearish market would be 1.2700.

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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.