- Oil gained power again and reached the $27 mark
- A 1.4045 level stopping the USD/CAD from its upward movement
- On Thursday, the BOC Governor Poloz speaks
4Hr Time Frame:
From a technical outlook, the USD/CAD appreciated around 0.8% over the last five days. It managed to reach the strong 1.4045 resistance.
By plotting the Fibonacci retracement tool, it is obvious how the price is hovering around the 61.8% level.
This level coincides with 2 other significant marks. A monthly level, the 1.4045, and the 100-SMA acting as a resistance.
The highest probability is that the Loonie appreciates against the USD, and the USD/CAD starts to depreciate from this level of confluence.
Another scenario, although less likely to happen, is the price moves beyond the three levels we mentioned and closes above it.
Then the USD/CAD likely will rally upward.
The crude oil chart below might give traders an idea of how the USD/CAD will move since the Canadian Dollar and the Crude Oil price are positively correlated.
It’s remarkable that Oil is consolidating below the 27 mark. It is however traded above the 100-SMA which signals a bullish sentiment among investors.
If the Oil breakout and closes above the 27 mark, Oil will continue its main trend upward.
On the other hand, if the price failed to break the 27 level, a bounce back is expected with a sharp movement downward.
On Thursday, the governor of Bank of Canada speaks. A dovish speech from the governor, this could lead the Loonie to tumble. In the opposite, a hawkish tone might lead the Canadian Dollar to rally against the US Dollar.
The upward movement in the oil prices is explained by the output cut decided by the OPEC. They declared a 10 million barrels cut per day.
With the US Dollar flirting around the 100 level, the Loonie will be entering in a sideways movement. Big moves will not be seen in the next few days before the governor of BOC speaks.