The USD card is sharply lower on the day after a spike in crude oil prices was triggered by the massive bomb blast in Lebanon yesterday. Initially thought to be terrorism-related, it appears the bomb blast was an accidental occurrence from a large stockpile of ammonium nitrate in a government storage facility. Nevertheless, crude oil price remains higher on the day ahead of the US crude oil inventories report scheduled for release later this afternoon.
The Canadian Dollar, which has a positive correlation to oil prices, has been the beneficiary of the latest market action. The USDCAD is presently trading lower for the 4th week in a row and has shed more than 400 pips since the start of July on the back of broad-based US Dollar selling and higher crude oil prices. Furthermore, today’s week ADP employment change number has cemented the weakness of the greenback on the day, as the USD remains on offer in the USDCAD pairing and across several major currency pairs.
The USD CAD is currently trading at 1.32565, or 62 pips lower on the day.
Technical Outlook for the USDCAD
The bearish action on the day looks set to extend the losing streak of this pair to the 4th day. Price has conclusively violated the 1.33487 price level but needs a lower close by today’s candle to cement the breakdown. This would put the USDCAD on a collision course with the 1.32044 support, with 1.31501 and 1.29953 lining up as potential support areas for the future if the weakness of the greenback persists.
A bounce on the 1.32044 price level allows for a retest of the 1.33487 resistance, with last week’s high at 1.34656 remaining relevant to a price recovery. Such an improvement could be made possible by stellar NFP numbers on Friday, or even positive US ISM Non-Manufacturing PMI numbers to be released later today. However, the overriding sentiment remains bearish as markets bet on a huge stimulus package from the US Congress, which means that recovery actions may be opportunities to sell on rallies.
USDCAD Daily Chart