USD/CAD: correction under the pressure of rising oil
Current trend
The price of oil has renewed its 11-year high. As a result, the USD/CAD pair has broken through the support level of 1.2650 and is preparing for further decline.
When making trade decisions, the analysis of the geopolitical situation and the consequences of a special military operation of Russian troops in Ukraine comes to the fore. The fighting continues, so, Western and European states are introducing new sanctions against Russia, one of the leading oil exporters on the world market. At the moment, investors' fears are related to a possible embargo of energy carriers to the European Union, in the import of which Russia plays a major role. It will not be possible to find alternative suppliers of this magnitude quickly, so the supply will likely be limited. Amid possible supply disruptions, WTI Crude Oil has already hit an 11-year high of $117 per barrel. As a significant exporter of "black gold" in the world market, Canada undoubtedly benefits from this situation, and its currency is strengthening, putting pressure on the USD/CAD pair. Yesterday, the "bears" broke through the level of 1.2650, and if there is no de-escalation of the military conflict soon, we can assume a further fall of the USD/CAD pair to the area of January lows (1.2500).
Meanwhile, rising energy prices are a catalyst for even more inflation, which the US Federal Reserve cannot cope with. The situation may change at the March meeting of the regulator, resulting in an increase in interest rates, which will have a strengthening effect on the US dollar. Thus, the USD/CAD pair dynamics will depend on the development of the crisis in Eastern Europe and how many basis points the US regulator will raise the rate.
Support and resistance
The long-term trend is upwards with key support at the level of 1.2500. After yesterday's breakout, the rate is tending to test key support. It is worth opening short positions from the area of 1.2685–1.2650.
The medium-term trend remains upward. Now, the "bears" are trying to break through the key support 1.2657–1.2636, and after the consolidation below it, the trend will reverse upwards to Target zone 2 (1.2444–1.2424). If it is held, then the growth of the trading instrument is likely to continue with the target at 1.2860.
Resistance levels: 1.2650, 1.2685, 1.2770.
Support levels: 1.2500, 1.2295.
The price of oil has renewed its 11-year high. As a result, the USD/CAD pair has broken through the support level of 1.2650 and is preparing for further decline.
When making trade decisions, the analysis of the geopolitical situation and the consequences of a special military operation of Russian troops in Ukraine comes to the fore. The fighting continues, so, Western and European states are introducing new sanctions against Russia, one of the leading oil exporters on the world market. At the moment, investors' fears are related to a possible embargo of energy carriers to the European Union, in the import of which Russia plays a major role. It will not be possible to find alternative suppliers of this magnitude quickly, so the supply will likely be limited. Amid possible supply disruptions, WTI Crude Oil has already hit an 11-year high of $117 per barrel. As a significant exporter of "black gold" in the world market, Canada undoubtedly benefits from this situation, and its currency is strengthening, putting pressure on the USD/CAD pair. Yesterday, the "bears" broke through the level of 1.2650, and if there is no de-escalation of the military conflict soon, we can assume a further fall of the USD/CAD pair to the area of January lows (1.2500).
Meanwhile, rising energy prices are a catalyst for even more inflation, which the US Federal Reserve cannot cope with. The situation may change at the March meeting of the regulator, resulting in an increase in interest rates, which will have a strengthening effect on the US dollar. Thus, the USD/CAD pair dynamics will depend on the development of the crisis in Eastern Europe and how many basis points the US regulator will raise the rate.
Support and resistance
The long-term trend is upwards with key support at the level of 1.2500. After yesterday's breakout, the rate is tending to test key support. It is worth opening short positions from the area of 1.2685–1.2650.
The medium-term trend remains upward. Now, the "bears" are trying to break through the key support 1.2657–1.2636, and after the consolidation below it, the trend will reverse upwards to Target zone 2 (1.2444–1.2424). If it is held, then the growth of the trading instrument is likely to continue with the target at 1.2860.
Resistance levels: 1.2650, 1.2685, 1.2770.
Support levels: 1.2500, 1.2295.
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