- The Canadian dollar traded near a 5-month high against the US dollar as oil prices rose.
- Rail operators in Canada have restored service, reducing risks to the economy.
- The US dollar rallied as investors dumped risky assets due to tensions in the Middle East.
USD/CAD outlook tilts bearish with Canadian dollar firm on higher oil prices. However, the move was muted as the dollar remained strong, with safe havens inflows amid escalating Middle East tensions.
-Are you interested in learning more about the Live Forex Calendar? Click here for details –
The Canadian dollar traded near a five-month high against the US dollar as oil prices rose. Canada is a net exporter of oil, so an increase in oil benefits the crazies. In particular, oil rallied on Monday as tensions between Israel and Lebanon intensified over the weekend.
Israel has exchanged missiles with Hezbollah, raising fears of a wider war in the Middle East. Such an outcome could affect oil supplies and tighten the market. Moreover, production cuts in Libya are likely to reduce oil supplies, which will further increase prices.
At the same time, the Canadian dollar strengthened as Canadian rail operators restored service, reducing risks to the economy. The Canadian Industrial Relations Board has put an end to work stoppages at two major railways that have caused much disruption
The CAD has remained strong since Friday, when Powell signaled a rate cut in September. Powell’s dovish tone weighed on the US dollar, allowing the lunatic to climb. However, the US dollar rallied by Monday as investors shed risk assets due to tensions in the Middle East.
The dollar is seen as a safe haven in times of uncertainty, such as fears of an escalation in the Gaza war. Therefore, USD/CAD traders had to balance a strong Canadian dollar due to oil prices and a strong US dollar due to safe haven demand.
USD/CAD Key Events Today
- US CB Consumer Confidence
USD/CAD Technical Outlook: Bears reign below the 1.3501 level
From the technical side, USD/CAD the price broke below the support level at 1.3501, reinforcing the bearish bias. Moreover, the price is well below the 30-SMA with the RSI in the oversold region.
-Are you interested in learning about forex signals? Click here for details –
USD/CAD maintained a solid bearish trend, with the price holding below the 30-SMA. Moreover, there is a good chance that this trend will continue as the price continues to fall to lower lows. However, the RSI is showing oversold conditions. Therefore, bulls could emerge to retest the 30-SMA before the downtrend continues. The next major psychological level is 1.3400.
Do you want to trade Forex now? Invest in eToro!
68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing money
