USD/CAD Price Supported by China’s Lockdown, Falling WTI

• There is increased anxiety over China’s COVID flare-ups.
• Saudi Arabia denied claims that it was considering an increase in oil supply.
• The trend has taken a bullish turn in the charts.

Today’s USD/CAD price analysis is bullish as the dollar continues pushing higher as investors seek safety. The dollar increased in value as investors fled to safe-haven assets due to anxiety over China’s COVID flare-ups.

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An increase in COVID cases has prompted new restriction measures, and the Chinese capital issued a warning on Monday that the country was facing its toughest test yet from the COVID-19 pandemic. The virus claimed lives in Beijing for the first time since late May.

“The safe-haven appeal of the U.S. dollar is coming back into vogue as the concerns around China and the outbreaks from COVID are keeping markets nervous,” said Rodrigo Catril, a currency strategist at National Australia Bank (NAB).

Tuesday saw a modest increase in oil prices following Saudi Arabia’s denial of a news story that it was considering an increase in oil supply. This comes after a decline following news from the Wall Street Journal (WSJ) that the OPEC+ meeting on December 4 would consider an increase of up to 500,000 barrels per day.

Prices immediately recovered when Saudi Arabia’s energy minister, Prince Abdulaziz bin Salman, declared that the country was sticking to output reductions. This strengthened the Canadian dollar, pushing USD/CAD lower but not enough to reverse the overnight gains.

USD/CAD key events today

Investors will listen closely to the speeches made by FOMC members Mester, George, and Bullard. These speeches will probably provide hints about future monetary policy. Investors will also pay attention to retail sales data from Canada.

USD/CAD technical price analysis: Bulls eying the 1.3500 level

Looking at the 4-hour chart, we see the price trading above the 30-SMA and the RSI above 50, showing bulls are in charge. The price pushed above 1.3302 and 30-SMA to start the bullish trend.

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There was strong resistance at the 1.3400 level, at which point the price retested the SMA as support. Since then, the price has pushed above 1.3400 and made a higher high. If bulls continue this trend, the price will likely hit and take out the 1.3500 key resistance level.

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