- Despite a strong rally, USD/CAD faces tough resistance above the 1.2500 mid-zone.
- The Canadian dollar was weakened by falling oil prices.
- This week will be a big week for the unemployment rate in Canada.
USD/CAD outlook is positive after Fed policymakers left hawkish comments. Meanwhile, weak WTI prices are also weighing on the Canadian dollar.
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After seeing a stronger buying reaction near the 1.2400 round number support, the USD/CAD price rallied strongly.
WTI prices fall
Oil prices fell due to increased supply from the United States. Following US President Joe Biden’s announcement that 180 million barrels would be released from the Special Petroleum Reserve (SPR) over the next six months, oil prices turned bearish. There was a significant impact on the Canadian dollar due to the drop in oil prices since Canada is the number one exporter of oil to the United States.
Recent FOMC Minutes
Additionally, hawkish comments from Federal Reserve System (FRS) policymakers strengthened the US Dollar after some time. According to March FOMC minutes on Wednesday, the Fed will raise rates by 50 basis points (bps) this year. In addition, Fed Chairman Jerome Powell promised to hike rates by half a percentage point on two out of seven occasions.
What’s next to watch for the USD/CAD outlook?
Unemployment data from Statistics Canada will be released on Friday and will likely have a major impact on assets. Compared to the previous estimate of 5.5%, the provisional unemployment rate is 5.4%.
Daily Open Interest USD/CAD
The USD/CAD price saw a significant rise yesterday. On the other hand, the daily open interest has also increased. This indicates that new buyers have entered the market. Therefore, the bias is now bullish.
USD/CAD Price Technical Outlook: Bulls Take Charge
USD/CAD price posted solid gains above the 1.2500 level. Additionally, the pair managed to rise above the 20 and 50 SMA on the 4-hour chart. However, the bulls found a tough resistance around the 100-period SMA.
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Volume data is positive for the pair. However, the recent consolidation has very low volume, indicating that the market is looking for a catalyst to gain further momentum. Any further buying will find resistance at 1.2590 (previous swing high). On the other hand, the downside move could find support around 1.2500 ahead of 1.2400.
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