USD/CAD jumps as oil plunges
It’s a bit of a double whammy for USD/CAD sellers today. Oil prices tumble already set the tone for a move lower for the loonie but add to the fact that commodities in general are also falling and risk sentiment is deteriorating, it’s helping to put a bid in the dollar as well.
Right now, price is threatening to hold a break above the 100-hour MA (red line) and in turn the near-term bias will turn more bullish. The immediate focus then will be to look towards resistance from the 38.2 retracement level @ 1.3245 which helped to limit yesterday’s recovery.
A break there will help to set the tone for a move higher back towards 1.3300. Given that oil has now broken a key support level and looks towards $50, it will mean continued pressure on the loonie over the coming sessions as buyers will have conviction to bid the pair higher.
There is a bearish case for the dollar as a result of falling oil prices as highlighted here, but that will take a much larger time frame to play out. For now, the more bullish near-term bias will lend itself as a good platform for a further move higher in USD/CAD in the short-term.