USD/CAD has fallen back below the 200-hour moving average today
Price is now threatening a move back towards the 1.3200 handle where the 61.8 retracement level lies but the support region around 1.3185-90 is also a key area for buyers to lean on for any near-term defense. However, with price breaking back below the 200-hour MA (blue line), the near-term bias is now more bearish.
This comes as oil prices extend their recovery on the day. Brent is now up by more than 2%, rising back above $60. Meanwhile, WTI is up by 1.4% to $51.14 currently. There isn’t any key economic releases in North American trading today, so trading the pair will rely heavily on market sentiment and today’s focus in on risk so far.
Looking at the daily chart:
Buyers should not feel too threatened yet as the upside momentum is still not broken. Daily support from the 61.8 retracement level @ 1.3132 will provide the first clues of any possible break back to the downside but only a break of the 100-day MA (red line) @ 1.3073 will confirm a break of the upwards momentum in my view.
In the week ahead, trading the pair will be subject to headline risks with the OPEC+ meeting in Vienna set to come on 6 December. Expect plenty of rumoured production cut headlines to come about in the mean time that may weigh on oil prices and in turn the loonie.
But with sentiment so bearish on oil prices currently, a break of the $50 psychological handle will lead to a slippery slope to the downside and that will see the loonie struggle as well. Right now the recovery in oil today is more of a retracement than a bottom being found, so let’s see which will turn out true in due time with the OPEC+ meeting to be the major focus in the week ahead.