USD/CAD: WTI recovery favors sellers targeting 100-day SMA
- Commodity-linked currencies benefit from the US Dollar weakness.
- Fewer data highlights trade/political news for fresh impulse.
With the recent recovery in crude prices joining already prevailing greenback weakness, the USD/CAD pair drops to the fresh two week low near 1.3375 while heading into Europe open on Wednesday.
The US Dollar (USD) has been on a back foot against most major currencies off-late as doubts over the Fed’s future policy and the US-led trade tussle push traders away from the greenback.
In doing so, safe-havens have been the major gainers whereas commodity-linked currencies, like the Canadian Dollar (CAD), also benefited from the same.
The Loonie favoring sentiment grew stronger after WTI ignored higher than previous crude oil stocks data from the API as upbeat comments from China’s President Xi Jinping and likely solution to the US-China trade tussle during G20 pleased energy buyers.
However, revised down global growth forecast by the World Bank and recent incidents signaling China’s dislike of Canada’s friendship with the US still caps the quote’s advances.
With lack of major data/events scheduled to roll out from Canada, speech from the Fed Vice Chair Richard Clarida and ISM non-manufacturing PMI will be important to watch. It should be noted that ISM gauge is expected to remain unchanged at 55.5.
Technical Analysis
A 100-day simple moving average (SMA) near 1.3350 can limit pair’s near-term declines, if not then 1.3275/65 area comprising April month low and 200-day SMA become crucial to watch.
Meanwhile, 1.3430, 1.3480 and 1.3525/30 may continue challenging the bulls ahead of pleasing them with 1.3565 and 1.3600 resistances.